Without delving into specifics on the taxation rate under the Goods and Services Tax (GST) regime, Finance Minister Arun Jaitley on Monday said it will be worked out by the GST Council.
GST rate was earlier suggested at 18 per cent by Chief Economic Adviser Arvind Subramanian.
“The GST Council will work on the functional modalities. The rate of taxation will also be determined there,” Jaitley said initiating the discussion on the 122nd constitution amendment bill in the Lok Sabha.
The constitution amendment bill is an enabling measure which will pave the way for the GST regime.
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After its passage in the Lower House, which is a given as the government enjoys a clear majority in the Lok Sabha, three laws will need to be prepared for GST.
“We will have to prepare three more laws. After ratification by states, the draft will have to be prepared by GST Council. The two laws on inter-state GST and central GST will have to come before the Parliament. The state GST will be passed by various state assemblies,” Jaitley said.
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Since GST will be the responsibility of the Centre and states both, the government wanted to have a larger consensus on it, he said.
“There has been a wide consensus. A large number of political parties have come forward in its support,” Jaitley said.
The Rajya Sabha had last week unanimously passed the Constitution amendment bill to pave the way for the introduction of a pan-India Goods and Services Tax regime.
The upper house passed what is called the Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, with 203 ayes in the final voting. The AIADMK staged a walk-out before the bill was passed in the upper house.
The government had moved amendments to the bill earlier passed by the Lok Sabha to accommodate some concerns of opposition parties.
The government has removed the one per cent additional levy and agreed to compensate for any loss of revenue to the states for next five years.
“There was a delay, but most of the political parties came on one platform. After a long time, after efforts which continued for a number of years, finally a consensus was formed,” he said. Initially, the GST was supposed to be applicable from April 1, 2010.
The Finance Minister said that after the GST comes into place the tax base is likely to increase as it will improve ease of doing business and mitigate tax evasion and tax cascading effect.