NEW DELHI: The legislation amending the Constitution to enable goods and services tax (GST) has become a law with President Pranab Mukherjee giving his assent to the bill ratified by more than 50 per cent state assemblies.
This is a significant milestone achieved in the implementation of GST that sets the stage for GST Council, which will work out the details of the tax, including the rate at which it will be levied.
The President has signed it, a government official said. The Constitution (122nd Amendment) (GST) Bill allows for introduction of GST that will replace multiple indirect taxes levied by centre and states, creating one national market that is expected to bump up GDP by as high as 2 per cent.
Once the date of the new tax is notified all state and central taxes that it subsumes will cease to exist.The government is looking to implement the new tax regime from April 1, 2017.
Finance Minister Arun Jaitley had on Wednesday said that though this is a stiff target, he would give it a try. “If we look ahead, its (April 1, 2017) a very stiff target we are running against time. I would certainly like to give it a try,” Jaitley had said.
Parliament had on August 8 passed the bill that was then sent to states for ratification. Such a constitution amendment bill requires at least half the state assemblies to ratify it before president’s assent is sought.
The GST Council, a body of states and Centre, is expected to be constituted shortly with Union finance minister as its chair and state finance ministers as its members.
The Centre will have one-third weight in the council while states together will have the remaining two-third. Decisions will have to passed by three-fourth vote, implying the need for consensus.
The council will take crucial decisions including the rate, laws, rules and procedures and administrative framework that will form the core of the CGST law and the IGST law, which will have to be passed apart from the state GST laws before the tax can be rolled out.
Once the central GST law is finalised, the government would introduce it in the winter session while states would take state GST law to their assembly.
“The GST, once implemented, would have a transformational impact by creating a seamless national market in the country for the first time,” Jaitley had said.
The GST will subsume central taxes such as excise duty and service tax and state taxes including VAT, octroi, entry tax.
A committee headed by chief economic adviser Arvind Subramanian has suggested a revenue neutral rate of 15-15.5 per cent and standard rate of around 18 per cent.
Credits ET Realty