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Cabinet nod to GST Bill
Sanjeev Sharma
Tribune News Service

WHAT IS GST

n GST will unify all Central and state levies such as sales tax and excise n The regime will exclude items such as petroleum fuels and liquor n The taxation system will cut business costs and boost government tax revenue n The UPA government is giving a signal of moving ahead on reforms as it has been criticised

New Delhi , March 15
The Union Cabinet today gave its nod to a Constitution amendment Bill to bring in what has been termed the most ambitious tax reform in the form of a goods and services tax (GST). The Bill will now have to be approved by Parliament but it is being opposed by the BJP-ruled states.

Finance Minister Pranab Mukherjee said this was the final step in the country’s most ambitious tax reform before introducing it in Parliament.

“We will try to introduce it in Parliament in this (Budget) session,” Finance Minister Pranab Mukherjee told reporters here.

With the Cabinet decision, the UPA government is giving a signal of moving ahead on reforms as it has been criticised on this front in the last couple of months. Faced with several scams, there has been criticism that the government is going slow on important reforms.

The Finance Minister is following up on his announcement earlier at the meeting of the Empowered Group of State FMs where he had said the Bill would be introduced in the Budget session of Parliament.

The GST will replace the indirect tax regime in the country and allow minimum exemptions. The impending

GST introduction was one of the main reasons why the Finance Minister did not tinker much with the indirect taxes namely - Excise and Customs duties and they are being aligned with the proposed GST rate of 10 per cent.

The GST will ease business transactions but is likely to miss its April 2012 deadline for implementation due to resistance from several BJP ruled states.

The bill needs the approval of two-third of parliament and of half of India’s 28 states to become law. At the last empowered committee meeting, 16 states had given their consent for the bill. Ten states opposed the revised draft Bill.

Commenting on the Cabinet decision, Pratik Jain, executive director, KPMG India said, “The Cabinet’s approval is certainly an important development and shows the Centre’s desire to move fast on GST implementation. Now the Bill would be referred to a Standing Committee for review and deliberations. If the Centre continues to engage in a constructive dialogue with States, then GST can be implemented sometime in 2012”

The UPA government will have to engage in hectic discussions with the opposition parties to get a breakthrough and the parleys would start once the bill is referred to the standing committee.