Moving towards Single Tax Regime
GST Bill introduced in Lok Sabha
A single rate GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer and end of "inspector raj" as well as "tax on tax," he said. "It will be single most tax reform after 1947."
While liquor has been completely kept out of the GST, petroleum products like petrol and diesel will be part of the new regime from a date to be decided at a future date by the GST Council, which will have two-third of its members from states. All decisions in the Council will require 75% votes. Also the states where goods originate can levy 1% additional tax over GST to make up for any revenue loss for the first two years.
As regards the compensation to the states on account of any possible loss of revenue following implementation of the GST, Jaitley said there will be 10% compensation in first three years, 75% in the fourth year and 50% in the fifth year.
The Bill will be considered for passing in the Budget session of Parliament beginning February, the Minister said, adding he did not feel the necessity of the legislation being referred again to a Standing Committee.
Touted as the single biggest indirect taxation reforms since independence and a "win-win" for Centre and states, the 122nd Constitution Amendment Bill for Goods and Services Tax (GST) was tabled by Finance Minister Arun Jaitley after extensive discussions to get states on board by addressing their concerns.
"It is expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy," Jaitley said.