GST: the journey so far

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The bill to introduce goods and services tax (GST), a comprehensive indirect tax on manufacturing, sale and consumption at a national level, is currently running its last lap. The Lok Sabha passed the constitutional amendment bill on 6 May. But in Rajya Sabha the government is in minority and differences between the centre and states still persist. The latest breakthrough in the government’s effort to roll out GST from 1 April next year has been an agreement between the two sides on how to levy the tax. Doubts remain on whether GST will roll out as planned from 1 April next year, but there is no doubt that the bill has come a long way.

1. In his 2006 budget speech, finance minister P. Chidambaram moots the idea of moving towards a goods and services tax (GST) and sets a deadline of 1 April 2010 for its implementation. He asks the empowered committee of state finance ministers to come up with a framework.

2. The empowered committee, headed by West Bengal finance minister Asim Dasgupta, releases its first discussion paper on GST in November 2009 after consultations with the central government and within the states.

3. The thirteenth finance commission backs a consumption-based taxation approach with no exclusions and a low tax rate.

The Congress-led United Progressive Alliance (UPA) government introduces the constitution amendment bill in the Lok Sabha in March 2011.

5. Parliament refers the bill to the standing committee for finance.

6. Sushil Kumar Modi is appointed as the new chairman of the empowered committee of state finance ministers in June 2012 to replace Asim Dasgupta, whose party, the Communist Party of India (Marxist), is voted out of power in West Bengal.

7. Abdul Rahim Rather, finance minister of Jammu and Kashmir, takes over from Modi after the latter’s resignation.

8. The standing committee submits its recommendations in August 2013 after extensive talks with the centre and the states. It recommends that exclusions under GST be kept at a minimum to avoid distortions.

9. The central government and the states continue to hold deliberations but a trust deficit continues over the federal government’s reluctance to pay compensation to states for losses from phasing out of central sales tax.

10. The constitutional amendment bill lapses with the dissolution of the 15th Lok Sabha in May 2014.

11. The new National Democratic Alliance (NDA) government at New Delhi renews efforts to strike a consensus with states and promises to pay central sales tax compensation to states.

12. After extensive talks with states, finance minister Arun Jaitley introduces the revised constitution amendment bill in the Lok Sabha in December 2014.

13. Kerala finance Minister K.M. Mani appointed as chairman of empowered committee, replacing Rather in March 2015

14. Lok Sabha passes the bill in May 2015.

Source: Livemint.com

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