NEW DELHI: Making good on a promise made in a phone call to Finance Minister Arun Jaitley a few days ago, Nitish Kumar called a special session of the Bihar Assembly which cleared the landmark Goods and Services Tax or GST reform today.
Other than the Left party, the CPI-ML, the legislature cleared the GST proposal unanimously.
Mr Kumar, the Chief Minister of Bihar, who usually finds free points of agreement with the centre, said his support to GST helped Prime Minister Narendra Modi win the support of opposition parties especially the Congress ,which, for years, had stalled the reform.
Like other state leaders, Mr Kumar wants the GST to be introduced urgently because it will give states larger revenues from tax collection.
The GST creates a national sales tax, replacing a patchwork of central and state levies. Parliament has cleared the proposal, which must now be approved by more than half of the country’s 29 states. That must happen within month for the centre to try and meet its deadline of implementing the GST starting April next year. Assam was the first state to clear the bill. Bihar is second.
After the states sign off on the amendment to the constitution which gives the government new taxation powers, parliament will review the proposed rate and scope of the new tax. The Congress has said it will not accept a rate higher than 18%; the government has indicated that’s too low, and is backed by states.
Mr Kumar today told Bihar law-makers that he had backed the government on insisting that an upper limit for the GST should not be laid out in the constitution because it would then require amending the constitution each time the rate was to be revised. After much negotiation, the Congress came around to that point of view.
Mr Kumar today said that the centre must share tax-collecting powers and authority with states and ensure that new complicated IT systems and software to compute and process the tax are made available to state officers.