The long – delayed Constitution (122nd Amendment) Bill, 2014 on Goods and Service Tax (“GST Bill”) has finally got the green signal of the Rajya Sabha on August 03, 2016 with the passage of the Bill to amend the Constitution, paving the way for
“One Nation, One Tax, One Market”.
Goods & Service Tax (“GST”), is the biggest indirect tax reform since independence, is aimed at dismantling Inter-State barriers to trade in goods and services by subsuming a slew of around 17 indirect taxes viz. Excise Duty, Service Tax, VAT, CST, Luxury tax, Entertainment Tax, Entry Tax, etc.
“GST will result in better tax compliance due to a robust IT infrastructure. Because of efficiency gains and prevention of leakages, the overall tax burden on most commodities will come down, which will benefit consumers,” the Finance Ministry said in a set of FAQs on GST.
The ministry has issued a set of FAQs and a total of 14 queries have been answered.The Rajya Sabha passed the ambitious GST Bill unanimously by a thumping majority of 203 Ayes and no one opposing the move with zero Nayes. The bill was passed after a seven-hour debate.
Click here to download the FAQ on GST
GST will be a game changing reform for Indian economy by developing a common Indian market and reducing the cascading effect of tax on the cost of goods and services. It will impact the Tax Structure, Tax Incidence, Tax Computation, Tax Payment, Compliance, Credit Utilization and Reporting leading to a complete refurbishment of the current indirect tax system.
GST will have a far reaching impact on almost all the aspects of the business operations in the country, for instance, pricing of products and services; supply chain optimization; IT, accounting and tax compliance systems.
Unanimous passage of the GST Bill is indeed a good sign for the economy, but, at the same time, it is just a beginning and still a long way to go ahead.
Since there are key amendments in the original draft of the GST Bill that was passed in the Lok Sabha last year, the GST Bill has to, once again, go back to the Lok Sabha.
Thereafter, the GST Bill will also have to be ratified by at least 50% of the States before being presented to the Hon’ble President of India for his assent. Subsequently, a GST Council will be set up within 60 days of the enactment of the GST Bill, comprising the Union Finance Minister, MOS – Revenue/Finance and State Finance Ministers, which will make important recommendations on GST rates, Exempted goods and services, dual control & adjudication, etc.
Thereafter, two legislation — Central GST (CGST) and Integrated GST (IGST) will have to be passed by Parliament and State GST (SGST) legislation by each of the State Legislatures.
This passage marks a victory for the government. Now, the next challenge for the government is to get States on board and get rest of the process completed as quickly as possible to meet the deadline of implementation of GST by April 2017.
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