New Delhi : Finance Minister Arun Jaitley on Friday moved a bill for debate and passage to amend the constitution and allow a single goods and services tax regime for the cuntry that will subsume all central and state levies and create a single Indian market.
The Constitution (122nd Amendment) Bill, 2014, was placed before the Lok Sabha, the lower house of parliamment for consideration and passage, even as the opposition demanded that it be sent to the relevant standing committee since some of its provisions had undergone a change.
But Jaitley took the stand that he had already introduced it in Lok Sabha on Dec 19, 2014 and suggested that the house take it up for discussion and its eventual passage. “No one has the monopoly to prevent India’s progress,” the finance minister said.
The discussion is slated for next week.
The government has targeted the new regime to come into force from the next fiscal. Jaitley told the house that in his limited intervention that the new regime will remove certain anomalies in the existing indirect tax terimes that were imposing a tan on tax already collected.
He said it was a win-win situation for both the states and the centre. As an example he said: “At the moment, the states do not get any shares of service tax. It entirely goes to the centre. But under the new regime, states will also get a share of services tax.”
The finance minister also said every decision in terms of levies under the goods and services tax will have to be ratified by 70 percent majority of a new council proposed in the amended bill, adding this will prove to be a much-desired example of cooperative federalism.
For the Constitution to be amended, it needs two-thirds majority in both houses of parliament and then its ratification by at least 15 state legislatures. It will then to the president for his final signatures.
Once this far-reaching amendment is carried out, India will have a new goods and services tax regime that will fo away with central indirect taxes such as excise duty, countervailing duty, and serice tax, as also state levies such as value added tax, octroi, and luxury tax.
The tax, thus, collected will be divided between the central government and states on the basis of formulae approved by Parliament, based on the recommendations of a Goods and Services Tax Council to be set up under the new statute.
The union cabinet, led by Prime Minister Narendra Modi, had last month approved the payment of compensation to states for the loss they would incur on account of a reduction in the central sales tax from 4 percent to 2 percent for three years from fiscal 2010-11.
Finance ministry sources said preliminary estimates indicate that Rs.33,000-crore could be the amount payable to states and union territories for the entire period, and settling these claims will help create an enabling environment for rollout of the new regime.