Narendra Modi led-BJP government is keen on pushing the constitutional amendments in the Goods and Service Tax (GST) Bill in the monsoon session of the Parliament.
While the bill has been passed in the Lok Sabha, it is facing roadblocks from the Congress dominated opposition in the upper house of the Parliament.
Ahead of the beginning of the monsoon session of Parliament on July 18, prime Minister Narendra Modi reached out to the opposition seeking its cooperation in the smooth passage of the GST Bill. The Congress however offered no aasurance on the GST saying that it could take a stand only after the government gives it a “written draft” over concerns raised by it.
Here is everything you need to know about the Goods and Service Tax Bill:
What is GST Bill?
The bill proposes a national value added tax to be implemented in India from June 2016 that would be a comprehensive indirect tax on manufacture, sale and consumption of goods and services throughout India, to replace taxes levied by the Central and State governments.
What is proposes?
– The Bill empowers the centre to impose an additional tax of up to 1%, on the inter-state supply of goods for two years or more. This tax will accrue to states from where the supply originates. While alcohol for human consumption has been exempted from the purview of GST, it will apply to five petroleum products at a later date.
– GST regime intends to create a harmonised system of taxation by subsuming all indirect taxes under one tax. It seeks to address challenges with the current indirect tax regime by broadening the tax base, eliminating cascading of taxes, increasing compliance, and reducing economic distortions caused by inter-state variations in taxes.
Who will be in the GST Council?
The GST Council, comprising of Union Finance Minister, Union Minister of State for Revenue and state Finance Ministers, will recommend rates of tax, period of levy of
additional tax, principles of supply, special provisions to certain states etc.
What compensation will be provided to the states?
Parliament may, by law, provide compensation to states for any loss of revenue from the introduction of GST, up to a five year period.
What are the key issues?
The additional 1% tax levied on goods that are transported across states dilutes the objective of creating a harmonised national market for goods and services. Inter-state trade of a good would be more expensive than intra-state trade, with the burden being borne by retail consumers. Further, cascading of taxes will continue.