The Rajya Sabha on Wednesday overwhelmingly passed the Constitution Amendment Bill which will facilitate rollout of the Goods and Services Tax or GST in the country.
The Bill is a big way forward in the direction of economic reforms agenda of Narendra Modi government.
Here are the highlights of the day:
* The Constitution (122nd Amnd.) [GST] Bill passed in Rajya Sabha
* Amendments on GST Bill put to vote in Rajya Sabha [Constitution (one hundred and twenty second amendment) Bill, 2014]
* Congress demands CGST and IGST be brought as finance bills, Jaitley says 'can't promise'
* We will fully comply with the Constitution, no intention of bypassing the Constitutional provisions: Arun Jaitley on demands of bringing GST bills as financial bills
* He (Aurn Jaitley) left one thing unsaid. It is a unanimous demand of this House that the CGST and IGST Bill are brought before us as a financial bill and not as a money bill: P Chidambaram.
* I request Arun Jaitely to bring CGST and IGST bill as a financial bill, and not as a money bill: P Chidambaram in Rajya Sabha
* AIADMK walks out of Rajya Sabha during discussion on GST
* Finance Minister Arun Jaitley responds to GST debate in Rajya Sabha
* The 2011 bill had nothing on how to compensate for losses. That is why there were protests. Let us not make this a Congress vs BJP thing: Arun Jaitley
* In the GST system you cant have the same assessee being assessed by Govt and the State: Arun Jaitley
* I think to implement the GST is a headache, to be a former Finance Minister is a luxury now: Arun Jaitley
* We will try for the most reasonable rate for GST: Arun Jaitley
* The state finance ministers did not agree to the 18 per cent cap figure as per the chief economic advisor's report. They wanted higher to keep a cushion
* Chief Economic Advisor's report is based on 2013-14, report does not say 18%; we gave a band of 17 to 19%.It's good if we maintain 18%: Arun Jaitley
* When GST system becomes more efficient, there will be no tax on tax, evasion will become more difficult : Arun Jaitley
* The GST will bring in three developments- 1) The system will be more efficient and compliance will be met. Avoidance is going to be difficult because you will be detected at some stage or the other. 2) There will be no cascading effect on tax on tax 3) There are few goods on which the tax might be higher or lower. 54 per cent of the CPI basket is tax exempt. 32 per cent are taxed at a lower rate. Only 15 per cent are taxed at the standard rate: Arun Jaitley
* The 2011 bill required consensus. The intention was good, but implementation was very difficult. Now, states have 2/3rd of the vote and Centre 1/3 rd: Arun Jaitley
* The states also have a veto on the Centre. The GST council effectively represents us. Today if the GST council makes a suggestion, almost every political party in some part of the country would be directly represented or in the future is directly represented. The powers of parliament are not taken away: says Arun Jaitley.
* The states admittedly have to be stronger but the union also has to be there. India is not a confederation of states but a union of states: Arun Jaitley
* Dialogue on GST incomplete without talking about its origin, says Anand Sharma
* Then BJP-led Opposition said Congress’ GST Bill push would weaken states, even called it ‘unconstitutional’: Anand Sharma, Congress
* Would’ve been better had there been better dialogue when Finance Minister Chidambaram tried to take GST Bill forward. Still believe it was a momentous, historic moment for the Congress: Anand Sharma, Congress
* After 2014, Chief Minister Modi became PM Modi and his thoughts on GST changed. Would’ve been nice if he were here today. Would’ve been nice if the present government acknowledged that UPA government’s concerns on GST were meant for good of nation: Anand Sharma, Congress
Even 18 per cent cap will lead to inflation, says Congress' Rajeev Gowda
* Everyone is focusing on 18 per cent cap when we already are at 15.8 per cent. If we go ahead and add this rate to the taxation, it will lead to inflation. We cannot break the backs of the poor. Service sector is the fastest growing industry, we should allow it to grow without burdening it: Congress' Rajeev Gowda
* We also need to look at administrative reforms before implementing the GST. We may need a GST service like the IRS or a whole bunch of newly trained people to handle this: Rajeev Gowda
* Both at the central and the state level, the transition towards GST model will be challenging. The principle of equity must be kept in mind while deciding on revenue neutral rate: NCP's Praful Patel.
* Sitaram Yechury says rights of states must be protected
* Are we going to reduce the states to come to Centre with begging bowls to ask for money?: CPIM's Sitaram Yechury
* How do we protect the rights of states? We (Rajya Sabha) are the council of states. I urge the Finance Minister to address this issue, and a provision be made when we discuss the GST bill: Sitaram Yechury
* Tax rate of 24 per cent will cripple most of the people of our country: Sitaram Yechury
* Bill should be brought back as finance bill and not as a money bill: Sitaram Yechury
* JDU’s Sharad Yadav urge the government to pass the GST bill as a finance bill and not as a money bill
* The Finance Minister after the debate must clarify that the bill will not be passed as a Money Bill and speak on the health of local bodies after GST: JDU’s Sharad Yadav
* We want to work with you and support you, don't do anything that sidelines us: Sharad Yadav
* Derek O’Brien of the Trinamool Congress Party calls GST a Girgit Samjhauta Tax
* We need to debate, legislate and implement the GST for the young India of tomorrow: TMC's Derek O'Brien
* It’s often confusing whether the BJP and Congress is supporting or not supporting the GST bill. Unlike our party, which has promised the GST in its manifestos. I feel like a teenager in the presence of these senior lawyers: Derek O'Brien
* It’s ofte
* GST can also be interpreted as Girgit Samjhauta Tax (Chameleon Compromise Tax) – it’s like a ping-pong match between the two sides – (Treasury and Opposition tax): TMC's Derek O'Brien
* Before we get to the details of the bill, let me talk of the ping pong the two parties (BJP and Congress) have played for over a decade: Derek O'Brien
* People ask me if my party supports the bill, perhaps the question should be posed to the government: Derek O'Brien
* AIADMK opposes GST, says it violates fiscal autonomy of the states
* This constitutional amendment bill is not constitutional. It violates the fiscal autonomy of the states: AIADMK's A Navneethakrishnan
* The Bill violates the federal structure of the constitution and hence democracy: A Navneethakrishnan
* How can a bill be passed without knowing the tax rate? Without defining it, this bill is a waste paper: A Navneethakrishnan
* Tamil Nadu will incur losses of over 9,200 crores due to the GST which has to be then compensated by the central government: A Navneethakrishnan
* SP's Naresh Agrawal says bill must not be brought in as a money bill
* The reason why the government does not accept a tax rate cap is because its intention is to increase the tax: Samajwadi Party's Naresh Agrawal
* We agree with P Chidambaram that the bill must not be brought in as a money bill. It has to be discussed in both the houses before it is implemented: Naresh Agrawal
* We are unwillingly supporting the GST so the people does not think Samajwadi Party is a roadblock in India's economic development: Naresh Agrawal
* BJP's Bhupendra Yadav says this GST bill has tried to simplify the tax that a common man has to pay
* The new financial transformation through GST Bill will strengthen India's economy and give justice to all economic sections of the country: Bhupendra Yadav
* Our bill has tried to simplify the tax that a common man has to pay. Through GST, we will bring together all the various taxes to be paid and the subsequent returns to be filed: Bhupendra Yadav
* India's strength as one of the biggest markets will converge into one marketplace from 29. Our bill has tried to simplify the tax that a common man has to pay. Through GST, we will bring together all the various taxes to be paid and the subsequent returns to be filed: Bhupendra Yadav
* Our PM believes that the states must work together for India's development. Through GST we will be able to portray India as one strong financial market: BJP's Bhupendra Yadav
* Standard rate of GST should not exceed 18 pc, says P Chidambaram
* Please now, on basis of your own report –‘Cap the tax rate’. We mean it cannot be changed with whim of Executive. Tax rate of this importance must only be changed with the approval of the Parliament: Chidambaram
* The worry that we have, including my government, is creeping taxation. When this bill is passed today, we will prepare for the next stage of the debate. The next stage is the central GST bill. I want an assurance from the government when that bill is brought, it will be brought as a financial bill and not as a money bill.
* I ask all of you do you agree or disagree with me - the rate should be changed only after the approval of Parliament. I, on behalf of my party, loudly and clearly demand that the standard rate of GST should not exceed 18%, says Chidambaram
* GST is supposed to be a more efficient tax. Because it is non-cascading, more people will comply with it: Chidambaram
* In high income countries, the average GST rate is 16%, in emerging market economies like India it is 14.1%. We need to keep the taxes low. At the same time, we must protect the revenues of the state governments.
* The heart of this bill is what will the tax be. It is not a matter between union finance minister and state finance ministers. There is a third line to it- that is the people of the country.
* One of issue was how can you, in destination based tax have provision like some states being allowed to impose add. 1 % tax? If you give some states power to impose 1% additional tax, it would have led to multiplicity of taxes: Chidambaram
* The 2014 bill was opposed, idea wasn't because we felt it was possible to have a more perfect bill. We tried to pass GST bill with support of principal opposition party but we failed. In last 18 months govt tried to pass GST without support of principal opposition & I'm glad you also failed: P Chidambaram
* What is the rationale of a GST? The rationale of GST is you should avoid multiplicity of taxes. GST doesn’t stand only for Goods and Services Tax, it also stands for Good Sense Triumphs: Chidambaram
* There are four major issues in the bill, including clumsy drafting. When we found there were too many flaws in the GST bill that could be fixed, we decided we could not support it. Congress party was never opposed to the idea of GST, says Chidambaram
* Merits of the system itself are that it would convert India into one uniform economic market. GST Bill will empower the states. It will increase revenue of states as well as Centre. It'll ensure that there is "no tax on tax". With a uniform tax rate, bring about seamless transfer of goods and services across country, enable us to check evasion: Jaitley
* 2/3rd of the voting power in the GST council belongs to states, 1/3rd belongs to the Centre: FM Arun Jaitley in RS
* There has been major consensus building that has taken place, extremely thankful to all opposition parties especially Ghulam Nabi Azad: Jaitley
* GST Bill is the most reformative tax reform, says FM Arun Jaitley in Rajya Sabha
The bill -- Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 – has been moved by Finance Minister Arun Jaitley in the Upper House, where it has been stuck due to opposition from Congress over certain provisions.
The Goods and Services Tax seeks to replace a slew of Centre taxes and levies, transforming the nation into a customs union.
Analysts believe that the new legislation will reduce cost of production and make the Indian trade and industry more competitive domestically as well as internationally, ultimately boosting the country’s economic growth by up to 2 percentage points.
The government will also move some amendments to the Bill, approved by the Union Cabinet last week. Once the amendments are approved the Rajya Sabha, the Bill will go to Lok Sabha to seek its nod again. The GST Bill was introduced in the Lok Sabha on December 19, 2014, and was passed by the Lok Sabha five months later on May 6. It was then referred to a Select Committee of the Rajya Sabha which submitted its report on July 22.
The changes adopted by the Cabinet are:
1. Scrapping of the proposed tax of one per cent on inter-State transactions
2. Compensation to the states for any revenue loss in first five years of GST rollout
The third and last demand of the Congress party which was not accepted by the Cabinet was:
3. The proposed GST rate should not go beyond 18 per cent
After its passage from the Parliament, at least 50 per cent of the states need to ratify the bill for it to become a law. This again could be a long-drawn process, since the states will have their own sets of issues and queries.
Jaitley this morning said that he was “hopeful of GST passage in the Rajya Sabha today and it will be rollout by April 2017” -- seven years later than originally scheduled.
“This (GST Bill) economically integrates India by both Centre and States pooling in their sovereignty and instead of having multiple taxation at multiple rates, tax on tax and the cascading effect, it integrates India into one economic entity,” Jaitley told NDTV.
“Evasion will become more difficult. It’s the step that will help the Indian economy to grow,” he added.
GST, dubbed as the biggest tax reform since Independence, he said, “It is a proposal which eminently requires a unanimity and overwhelming consensus. Our effort has been to avoid a split as far as possible.”
AIADMK to oppose GST Bill
The government said that 31 of 32 parties are onboard on the matter in the Rajya Sabha. The AIADMK, which rules Tamil Nadu, is the only party to oppose the legislation. It has signalled that it will walk out rather than vote against the Bill. Tamil Nadu as a manufacturing state faces losses from GST, which earns revenue for consumption.
Timeline:
The Congress originally mooted the GST in 2006 and a constitution amendment bill was introduced in the Lok Sabha in March 2011 but it lapsed with the dissolution of the 15th Lok Sabha.
Budget 2006-07: It was announced that the GST will come into effect by April 1, 2010
April 2008: Empowered Committee (EC) of state Finance Ministers, headed by the then West Bengal Finance Minister Asim Dasgupta, submits report to the Centre.
December 2008: After Centre’s views in October and December, joint working groups were formed to examine options on exemptions, taxation of services and inter-state supplies, etc.
November 2009: First discussion paper of Empowered Committee was released.
March 22, 2011: The Constitution (115th Amendment) Bill was introduced in Lok Sabha. It was referred to Parliamentary Standing Committee on Finance.
August 7, 2013: The Parliamentary Standing Committee on Finance submitted its report. The present Bill lapsed as term of the Lok Sabha ended in 2014.
December 19, 2014: the NDA government introduced Constitution (122nd Amendment) Bill introduced in Lok Sabha.
May 6, 2015: Constitution Amendment Bill passed was by Lok Sabha
May 12, 2015: Bill referred to a 21-member Select Committee of Rajya Sabha headed by Bhupender Yadav
July 22, 2015: Select Committee submits its report
Salient features of the GST:
1. GST will subsume central indirect taxes like excise duty, countervailing duty and service tax, as also state levies like value added tax, octroi and entry tax, luxury tax.
2. The final consumer will bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
3. As a measure of support for the states, petroleum products, alcohol for human consumption and tobacco have been kept out of the purview of the GST.
4. It will have two components - Central GST levied by the Centre and State GST levied by the states.
5. However, only the Centre may levy and collect GST on supplies in the course of inter-state trade or commerce. The tax collected would be divided between the Centre and the states in a manner to be provided by the Parliament, on the recommendations of the GST Council.
6. The GST Council is to consist of the Union Finance Minister as chairman, the MoS for Finance and the Finance Minister of each state.
GST will replace following Central taxes:
1. Central Excise Duty
2. Duties of Excise (medicinal and toilet preparations)
3. Additional Duties of Excise (goods of special importance)
4. Additional Duties of Excise (textiles and textile products)
5. Additional Duties of Customs (commonly known as CVD)
6. Special Additional Duty of Customs (SAD)
7. Service Tax
8. Cesses and surcharges in so far as they relate to supply of goods or services
State taxes that the GST will Subsume
1. State VAT
2. Central Sales Tax
3. Purchase Tax
4. Luxury Tax
5. Entry Tax (all forms)
6. Entertainment Tax (not levied by local bodies)
7. Taxes on advertisements
8. Taxes on lotteries, betting and gambling
9. State cesses and surcharges
