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RS select panel endorses GST Bill, proposes modifications

22-July-2015
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RS select panel endorses GST Bill, proposes modifications

The select committee of the Rajya Sabha, which had been constituted to study the GST Bill and give its suggestions to the House, submitted its findings today. The committee has endorsed almost all provisions of the Bill with only some changes recommended, as reported by Doordarshan.

This means that the landmark bill, which could have been in danger of getting swamped during the ongoing session by other issues, has moved one step closer to meet the proposed April 2016 deadline. It now needs to pass in the Rajya Sabha when it will get tabled later during the Monsoon Session. The bill has already been passed in the Lok Sabha where BJP enjoys a majority but in the Upper House, the BJP will need to get many of the state governments, which are not completely happy with the Bill, on its side.

According to media reports, the committee recommended for a commitment by Centre to compensate states for a period of 5 years along with a few other recommendations.

The bill has been hotly contested by Congress, AIADMK and Left parties, whereas the BJP and its allies have called it the single, biggest tax reform since independence.

If the GST Bill does come into existence, it will subsume third party levies like excise, service tax, etc.

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. For example, Ashish Shah, COO of Pepperfry.com, also called GST a “fantastic” move for the e-commerce sector as it would introduce regularization and simplification of tax across the country. “This (GST) will especially considering states like Kerala and Kolkata where B2C is cumbersome. The implementation of GST will enable us to service these States in a better manner.” he said.

Implementation of GST a boon for e-commerce sector

He further added that this will have a larger impact on ecommerce as a business as common taxation and ease of transportation of goods is what will help players expand operations and reach.

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