Goods And Service Tax Bill Faces Rajya Sabha Test Today

The GST, the biggest indirect tax reform since 1947 which is expected to boost manufacturing, will replace central taxes like excise duty and service tax and state levies such as sales, value-added, entertainment and purchase taxes. All entry taxes like octroi will also be subsumed under GST.

All goods and services, except alcohol, will be covered by GST. Petroleum products will come under GST but the decision over when to start levying the new tax has been left to the GST Council to decide.

GST, which was first mooted 12 years ago but couldn't be approved as states feared curb on their fiscal powers, would boost economic growth by up to 2 per cent, Jaitley had said.

While the GST panel had set the tax rate at 27 per cent, well above the global average of 16.4 per cent, Jaitley said the proposed rate was "too high" and needed to be "much more diluted".

The reform of the indirect taxation was initiated by the Kelkar Committee in 2003 following which the UPA government in 2006 proposed a GST.

Commending the bill, Jaitley said this is a "very important moment" because the whole process of indirect taxation in India will change once the GST is implemented.

He said concerns of both manufacturing states like Maharashtra, Tamil Nadu and Gujarat, and other consuming states have been taken into account and states would stand to gain by implementation of GST.

Industry and experts hailed the passage of the Bill saying that it would boost economic growth but first it has to pass muster in the Rajya Sabha.

"Now, even if the Bill goes to a select committee of the Rajya Sabha, one would hope that GST meets its deadline of April 1, 2016," KPMG India Partner (Indirect Tax) Pratik Jain said.

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