GST becomes reality, passed in Rajya Sabha unanimously

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The Rajya Sabha on Wednesday passed the relevant Constitution amendment bill to pave the way for the introduction of a pan-India Goods and Services Tax regime.

With Congress extending support, it was passed in the upper house unanimously with two third majority.

Tabling the bill in the Rajya Sabha, Finance Minister Arun Jaitley said, “The GST will bring in three developments. One, the system will be more efficient and compliance will be met. The avoidance is going to be difficult because you will be detected at some stage or the other. Secondly, there will be no cascading effect on tax on tax and thirdly there are few goods on which the tax might be higher or lower.”

Joining the discussion, the Congress MP and former Finance Minister P Chidambaram urged the government to cap the GST rate at 18 per cent.

On the concerns raised by the leader from the opposition party, Jaitley said,“We will do everything in compliance of the constitution. We will not do anything in contravention to the constitution.”

The government has already circulated official amendments to the GST bill to drop 1 per cent additional tax and include a definite provision in the statute for compensating states for revenue loss for 5 years.

With the passage of this new bill in the upper house, it would be 122nd amendment Bill 2014 with all the 197 members present during the voting in its favour.

Meanwhile, the rate and scope of the new tax has not been defined yet. The Congress, reissuing a warning that it must not exceed 18%.

“We will sincerely do everything to keep it (the GST) as low as possible,” said Finance Minister Arun Jaitley, stating that a 17 to 19% rate will be considered.

When the debate on the GST bill began in the Rajya Sabha, Mr Jaitley thanked opposition parties for multiple rounds of negotiations that helped evolve consensus on the proposal. Through the day, the discussion was studded with good speeches and notes of appreciation and conciliation, rare in recent months between the government and the main opposition party, the Congress.

Senior Congress leaders led by former Finance Minister P Chidambaram were backed by  smaller parties in asking that the GST rate must be voted on by both houses of parliament.  The rate will be decided in the coming months by a council that combines the Finance Minister with a representative from each state government.

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