New Delhi:In the biggest tax reform since Independence, the national sales tax or GST Bill was today approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system to turn the country into world’s biggest single market.

The 66-year-old Constitution, which gives power to Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill.

Prime Minister Narendra Modi said the GST will “also be the best example of cooperative federalism” and “Together we will take India to new heights of progress”.

The legislation was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate during which a rare bonhomie was witnessed among the ruling and the opposition parties.

Replying to the debate, Finance Minister Arun Jaitley said the GST rate will be kept “as low as possible” but did not commit to a specific rate despite opposition benches pressing for it.

“We will also try and keep the rate as low as possible, certainly much lower than what the present situation is. And as compliance increases, the possibility of that rate coming down further would be there,” he said.

The tax rate, he said, would be decided by the GST Council comprising of Union Finance Minister and representatives of all 29 states.

“We must trust the sense of responsibility of the states who belong to the same political parties as us. Who in their last meeting said that our guiding principle is going to be — one we will lower the burden of tax,” he said.

The Finance Minister said presently 80 per cent of goods attract 12.5 per cent of Central excise duty while at the state level 55 per cent of items are charged with 14.5 per cent VAT or sales tax.

The weighted average of the two in 65 per cent of the items comes to 27 per cent. Adding cess, octroi and entry tax takes the figure to 30 per cent, he said.

In deciding the GST rate, “we are guided by two factors — 27 per cent is too high, it is inflationary, it costs the people, so it should come down… the second they said we will collect what is essential for our present revenue requirement,” he said.

Jaitley said members will have an opportunity to speak on subjects when the supporting GST Bill comes up in November.

The GST, he said, will make the system more efficient, increase tax compliance and tax avoidance will become more difficult as it will be detected at some stage or the other.

Also, there will be no cascading effect of tax on tax, he said adding there are certain items which will either attract lower rate of tax or no tax at all.

Ruling out GST impacting inflation, Jaitley said 54 per cent of goods in the basket used to calculate consumer price inflation are tax exempt and another 32 per cent attract low rate of tax. Only 15 per cent are taxed at standard rate.

The Goods and Service Tax (GST), which was first proposed a decade back, is seen as potentially transformative for India’s economy, adding as much as 2 percentage points to the GDP while also improving the ease of doing business and encourage investment in manufacturing.

It is also expected to result in greater tax compliance, boosting government revenues.

The GST will replace more than a dozen levies central and state levies, including central excise duty, service tax and central sales tax as well as VAT on sale of goods and entry tax, to make movement of goods seamless across 1.3 billion market. Instead of the good being taxed multiple times at different rates, under the new GST regime goods would be taxed at point of consumption.

The Bill passed today will create a GST Council comprising Union Finance Minister and his counterparts from the states. This body will determine the final rate.

The Constitution (122nd Amendment) Bill, 2014, that would lay the ground for roll out of Goods and Services Tax (GST) regime, was passed by the opposition-dominated Upper House after the government moved four amendments.

These included one on scrapping of the proposed tax of up to 1 per cent on inter-state transactions to compensate manufacturing states and another one promising to compensate states for any revenue loss in first five years of GST implementation.

The other amendments pertained to a new formulation on a dispute-resolution mechanism and an endorsement of the resolution by the empowered committee of state finance ministers on a revenue-neutral rate to bring down the incidence of tax on the common man while protecting revenues of states.

During the debate former finance minister and Congress leader P Chidambaram reiterated party’s demand to keep GST rate below 18 per cent and asked government to specify its stand on the issue while including the rate in the subsequent GST bill. He also asked the Government not to convert the subsequent GST laws into money bills to bypass Rajya Sabha.

Money bills do not require approval of the Upper House and their mere passage in the Lok Sabha, where the ruling NDA has absolute majority, is enough for converting it into a law.

His twin demands found favour with other opposition leaders including Sitaram Yechury (CPIM), Naresh Agarwal (SP).

AIADMK was the only party which opposed the GST in totality.

Govt to announce GST implementation roadmap tomorrow

New Delhi:With Rajya Sabha approving the long-delayed GST bill, the government will tomorrow announce the implementation roadmap for the national sales tax regime, Revenue Secretary Hasmukh Adhia said today.

“It is only end of a beginning. The real work starts now,” he said. “We will announce implementation roadmap tomorrow.”

Stating that work has to be on war footing from now on, he said, “We want to implement it as soon as possible.”

In the biggest tax reform since Independence, the national sales tax or GST Bill was today approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system to turn the country into the world’s biggest single market.

The 66-year-old Constitution, which gives power to Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill.

The legislation was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate.

GST bill passage: PM says truly historic, thanks parties

New Delhi:Prime Minister Narendra Modi tonight hailed the passage of the Constitution Amendment Bill on GST by Rajya Sabha as a “truly historic occasion” and thanked leaders and members of all parties for their support.

He said the GST will “also be the best example of cooperative federalism” and “Together we will take India to new heights of progress”.

Soon after the passage of the Constitution (122nd Amendment) Bill, 2014 to facilitate rollout of GST, Modi tweeted, “On this truly historic occasion of the passage of the GST Bill in the Rajya Sabha, I thank the leaders and members of all parties.”

He added, “Our MPs must be congratulated for their path- breaking decision to give India an indirect tax system for the 21st century.”

This reform, the Prime Minister said, will promote ‘Make in India’, help exports and thus boost employment while providing enhanced revenue.

“We continue to work with all parties & states to introduce a system that benefits all Indians & promotes a vibrant & unified national market,” he added.

GST will bring new era of development, economic reforms: Shah

Kolkata:BJP national president Amit Shah today said that the passage of the GST Bill, which was placed in the Rajya Sabha today, would usher in a new era of economic reforms and development in the country.

“Today the GST Bill has been placed in Parliament. The Bill is very important for West Bengal. With its passage, a new era of economic reforms will be ushered in and it will contribute to the development of the country,” Shah said while addressing a party programme here.

The Congress and most other political parties, except AIADMK, today expressed support with certain conditions to the introduction of the GST in the country.

The BJP president countered criticism by opposition parties over many foreign trips of Prime Minister Narendra Modi, arguing that actually Modi had undertaken less foreign trips than his predecessor Manmohan Singh.

“If you go through the statistics you will see that Modiji had undertaken less foreign trips than his predecessor Manmohan Singh. Manmohan Singhji also undertook several foreign trips, but the difference is that nobody was aware of such trips because he used to visit foreign countries silently and come back silently,” Shah claimed.

“He just used to visit a foreign country, read out the statement and come back. And at times he read out the printout meant for Indonesia in Malaysia and Malaysia in Indonesia. But whenever Modiji visits a foreign country thousands of people came out to greet him. This love and respect is not meant for Modiji but for the people of the country,” Shah said.

Shah said that the biggest achievement of the BJP government was to check corruption in the country and Modi ensured that poor people had bank accounts enabling them to receive benefits directly.

“By the direct transfer of subsidies, corruption worth thousands of crores of rupees has been checked. India is witnessing a new era of hope under the BJP rule, which is in sharp contrast to the despair the country had witnessed during the Congress rule,” he said.

GST to curb black money, April 2017 rollout tough: Experts

New Delhi:The Goods and Services Tax (GST) regime will weed out black money and usher in an efficient taxation system, but the April 2017 rollout deadline appears to be challenging, experts said.

“GST will be the biggest reform since 1991 which will make India an attractive destination for foreign investments.

Manufacturing will get more competitive due to the emergence of a national market as against the present fragmented one.

“The low tax to GDP ratio of the country will go up, helping the government to adhere to fiscal discipline and keep inflation in check. It will improve productivity and transparency,” Hinduja Group Chairman Ashok P Hinduja said.

The passage of the GST Constitutional Amendment Bill is a “milestone in the history of India’s economic reforms” and makes the country competitive, especially in manufacturing, in the global market, said Sachin Menon, Partner and Head, Indirect Tax, KPMG in India.

The Rajya Sabha today gave its approval to the long pending GST Bill as the government brokered a consensus with other political parties to get the reform legislation passed.

The April 1, 2017, rollout deadline for the new indirect tax regime looks tough but both the states and Centre are ready in terms of preparedness, experts said.

“In terms of the affirmation and righteous intent on GST to be implemented in the country, possibility of its implementation from April 1, 2017 would be arduous, if not impossible,” said Nangia & Co Managing Partner Rakesh Nangia.

According to PwC (India) Partner, Indirect Tax, Anita Rastogi, both the Centre and states are on the right path for GST implementation with broad modalities in place.

“Technically, April 2017 can happen. It looks tough but not impossible. Implementing from June or July would be easier as GST is a transaction tax,” she said.

The Centre has already put up in public domain the model GST law, the rules for business processes and refunds.

“An April 2017 deadline would therefore be challenging.

Realistically, the date may be closer to July or October 2017,” said Rohit Jain, Partner, Economic Laws Practice.

After the passage of the GST Constitutional Amendment Bill by the Lok Sabha and the President’s assent, the GST Council will be set up. Parallely, 50 per cent of the state assemblies or at least 15 states will have to ratify the bill.

Following that, the Central GST (CGST) legislation is expected in Parliament in the Winter session and the State GST (SGST) will have to be passed by respective state assemblies.

Also, the GST Network (GSTN) that will form the IT backbone for the entire levy would have to be evolved.

PTI