In a big step forward for the long-delayed goods and services tax (GST), the Union Cabinet gave its assent late on Wednesday to the constitutional amendment bill that needs to be approved before the levy can become reality, with the Centre having made significant concession to get states on board.
The bill is likely to be introduced in Parliament on Thursday and the government hopes to roll out GST on April 1, 2016, replacing a range of indirect taxes levied by the Centre and state governments
Here’s your 10-point cheat sheet on this big story:
1) The revised Bill takes into account the deal reached between the Centre and states on contentious issues like including petroleum, alcohol and tobacco in GST. These items account for a major portion of states’ tax revenues.
2) At present, petroleum products will be not be included in the GST but will remain within the central act and will be brought in at a later stage through the GST councils. Alcohol will be exempt from GST and states would have the freedom to decide their own levy. Service tax will be subsumed within GST.
3) In case of losses in the states’ exchequer, the Centre will give 100 per cent compensation for the first three years, 75 per cent compensation for the fourth year and 50 per cent compensation for the fifth year.
4) The government wants to introduce the Bill in the ongoing winter session that concludes on December 23.
5) The government on Monday decided to keep petroleum out of the proposed GST in return for states agreeing to entry tax being subsumed in the new indirect tax regime proposed from April 2016.
6) The GST Bill needs to be cleared by at least half of the states, besides Parliament, before its implementation.
7) The launch of GST has been delayed by nearly seven years, as states were concerned about revenue losses on introduction of the new tax regime.
8) The GST will cut down the large number of taxes imposed by the central government and states and will lead to the creation of a unified market, which would facilitate seamless movement of goods across states and reduce the transaction cost of businesses
9) The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, has lapsed and the Modi government will be required to come up with a fresh bill.
10) If successful, economists say the implementation of GST could add 2 percentage points to GDP growth.
Source : NDTV