With just three days of the Monsoon Session left, the NDA government managed to table the Goods and Services Taxation bill in Rajya Sabha this afternoon, hoping to push the legislation through despite continuous protests by the Congress party.
While the bill has already been passed in Lok Sabha, where the government has a majority, it is likely to face an uphill task in Rajya Sabha, where it is in a minority and would therefore depend on the support of parties such as the Samajwadi Party, the Trinamool Congress, Janata Dal (U) and Biju Janata Dal.
Prime Minister Narendra Modi, during his visit to Chennai earlier this week, met with AIADMK chief Jayalalithaa hoping to secure her party’s support in Parliament.
Here’s a timeline of the proposed reform legislation and how it advanced through the years:
2000: The Atal Bihari Vajpayee government set up an empowered committee, headed by then West Bengal Finance Minister Asim Dasgupta, which was given the task of streamlining the GST model to be adopted as well as putting in place the required backend infrastructure that would be needed for its implementation.
2004: The Kelkar Task Force on the implementation of the FRBM Act, 2003 had then pointed out that although the indirect tax policy in India has been steadily progressing in the direction of VAT principle since 1986, the existing system of taxation of goods and services still suffers from many problems. The task force suggested a comprehensive Goods and Services Tax (GST) based on VAT principle.
2006: In his budget speech, then finance minister P Chidambaram announced the proposal to shift to a national taxation system. “It is my sense that there is a large consensus that the country should move towards a national level Goods and Services Tax (GST) that should be shared between the Centre and the States. I propose that we set April 1, 2010 as the date for introducing GST.”
2007: An empowered committee of state finance ministers began drawing up a roadmap on the legislation and in November that year, a joint working group submitted its report to the empowered committee.
2008: In April, the EC finalised its report titled “A Model and Roadmap for Goods and Services Tax (GST) in India” containing broad recommendations about the structure and design of GST. In response to the report, the Department of Revenue made some suggestions to be incorporated in the design and structure of proposed GST.
2009: In November, the EC, based on inputs from the Union government and states, released its First Discussion Paper on GST in India with the objective of generating a debate and obtaining inputs from all stakeholders.
2010: In his budget speech, then finance minister Pranab Mukherjee said the new legislation would come into effect from April 1, 2011. “I am confident that the government will be in a position to implement DTC (direct tax code) from April 1, 2011.” However, the UPA government failed to implement the new tax reform.
2011: In March, the Constitution 115th Amendment bill was introduced in Lok Sabha to levy GST on all goods and services except those specified. The bill was sent to the Standing Committee
2013: The Standing Committee submitted its report to Parliament. However, the UPA government failed to win the support of BJP-ruled states including Gujarat forcing the legislation to lapse with the dissolution of the 15th Lok Sabha.
2014: The BJP government, which stormed to power in May, began pushing the legislation through with Finance Minister Arun Jaitley introducing the Constitution (122nd Amendment) Bill in December that year. While the Congress party demanded that the bill be sent to a Standing Committee, the government pushed it through the Lok Sabha, where it has a significant majority.
2015: Finance Minster Arun Jaitley announced in his budget speech that the government is keen on implementing the GST by April 1, 2016 and hoped that the bill will be cleared by Parliament. In the on-going Monsoon Session, the government is hopeful of passing the bill in Rajya Sabha, where it lacks a majority, with the support of regional parties.