In an interview to Doordarshan on the sidelines of the ongoing BRICS summit in Russia, FM Arun Jaitley stressed on the importance of the GST bill and said the chances of it getting passed in the upcoming monsoon session of parliament looked good.
“There will always be friction in politics. Some people will try to stop it, some will try to pass it. I feel the GST Bill is very important and it is likely to be passed in the monsoon session,” said Arun Jaitley in the interview.
The Finance Minister has been a strong advocate of the GST Bill and has been urging his peers to ensure that the bill meets the deadline of April 2016. Even though the bill was passed in the Lok Sabha earlier this year, it could not be passed in the Rajya Sabha as the opposition repeatedly stalled proceedings. To appease the opposition the FM suggested the bill be presented to further scrutiny by a 21 member committee, which is expected to submit its report by the end of the monsoon session.
What changes will the GST bring in?
The BJP is touting the Goods and Services Tax (GST) as the biggest tax reform since 1947. The basic idea is to do away with the dual tax system prevalent in the country and implement a single, uniform taxation policy for the entire nation.
This should, in theory, lead to free movement of goods and cut down the numerous indirect taxes levied by the central and state governments. Economists and the Finance Minister himself claim that the GST will increase India’s GDP by 2 per cent.
For consumers, GST could lead to reduction in cost of products and increase in efficiency in the long run.
However, there has been a lot of opposition from some states and opposition parties. Some states are worried that they will face reduced revenue with the implementation of a single tax. Earlier this year, the government issued a number of sops for states to bring them on board. This included promising to provide compensation for the first three years and allowing states where goods originate to levy an additional 1 per cent tax. However, not all states are convinced and there has been an ongoing tussle between the centre and states regarding the compensation period and other issues. The Bill needs the ratification of 50 per cent of the states for it to pass.
E-retailers in general have been pro-GST from the outset. “From the perspective of the e-commerce industry, the implementation of GST would help them significantly in setting up their logistics infrastructure at strategic locations. This would help them save costs which would be passed onto the end consumer,” opines Viren Malhotra, an independent SME scale-up specialist.