August 4th, 2016
GST Bill cleared by Rajya Sabha
The Rajya Sabha on Wednesday night gave an advance gift to the country for the upcoming 70th Independence Day by passing the GST Bill. The Upper House of the Parliament voted unanimously in favour of the Goods and Services Tax (GST) Bill which was pending in the house since a long time. The Bill is one of the most important economic reforms in the history of independent India.
How the truce happened:
Thanks to flexibility and cooperation shown by both the government and the opposition, the Bill saw the light of the day. The BJP government included most of the major demands of Congress such as removal of 1% additional tax in manufacturing states and clearer provisions for compensating states for revenue loss for five years. At the same time, Congress got all its MPs to vote in favour of the Bill despite one of its main demands of including tax rate in the Bill not being entertained by the government. The only party who remained opposed in the end was AIADMK, the ruling party of Tamil Nadu, whose MPs staged a walkout during voting. Finally, the Bill got cleared with 203 votes in favour and none in against.
What the Bill promises:
The GST seeks to replace all the existing state and central indirect taxes with one single levy. Currently the states collect VAT, Sales Tax, Luxury Tax, Entertainment Tax and many other taxes. GST will subsume all of these and replace them with one single tax. This is expected to unify the tax rates across all states, converting the country into one unified market where any trader can buy or sell goods and services from anywhere and still pay the same cost. This will not only boost the businesses but also prove beneficial to consumers who will see the prices of commodities coming down. It will also make Indian goods and services more competitive globally which can be leveraged by Indian businesses to their advantage.
So now the Bill has become a law. Since it was passed by Rajya Sabha with amendments, the Bill will be sent to Lok Sabha to ratify these amendments. This should not be a problem as Lok Sabha has already passed the Bill and the government enjoys a full majority in the Lower House. Next, the Bill will be sent for approval by atleast 50% of state assemblies. This step can take some time, as BJP is still not ruling in 50% of the states, and although other parties have come on board, there may be differences within them regarding the details. Only after they approve, will the Law finally come into effect.
Anyways, the Rajya Sabha was the most crucial test for this legislation and it is heartening to see that it has been cleared. The Logical Indian congratulates the country for moving one step closer to a breakthrough economic reform. We also thank the MPs across parties who kept their political differences aside and came together to pass the GST Bill.
– Abhishek Mittal