The Union Cabinet has approved the Constitution Amendment Bill on goods and services tax (GST), which will pave the way to bring about long-standing indirect tax reforms. The GST bill, with a goal to unify markets and avoid tax cascades, is likely to be tabled in the Parliament during the ongoing Winter session.
The government is aiming at rolling out the goods and service tax (GST) from April 1, 2016. The new bill will end the disparity in VAT and establish a nationwide indirect tax regime. The efforts were stalled for around seven years, but the Modi government is determined to make it a reality soon.
The GST Bill was last introduced in the Lok Sabha in 2011 by the then UPA government, but failed to go through. In a bid to woo the states, the government has decided to keep petroleum out of GST for a few years so that the states agree to entry tax being subsumed in the new tax regime.
Under the new indirect tax regime, there will be uniformity in the prices of all goods and items, as all states will follow the same tax structure. The proposed GST council will have key powers such as inclusion/exclusion of items. The Centre will retain veto power in the council, although it represents one-third of the quorum. The bill also provides compensation to the states for any revenue loss because of GST roll out.