The proposed goods and services tax moved a step closer to reality on Wednesday with the Lok Sabha approving four bills that will subsume a profusion of central, state indirect taxes and help create a single, unified market.
The Lower House of Parliament passed the bills by voice vote, after Speaker Sumitra Mahajan initiated clause-by-clause voting at the end of a long debate on GST, billed as the country’s biggest tax reforms since independence.
These legislation are the central goods and services tax (CGST), the integrated goods and services tax (IGST), the goods and services tax (compensation to states), and the Union territory goods and services tax (UTGST).
“These are revolutionary bills which will benefit all. States have pooled in their sovereignty into the GST council, and Centre has done the same,” finance minister Arun Jaitley said.
The Lok Sabha vote cleared the path for a July 1 rollout of the GST, putting aside years of political differences on how to replace a slew of taxes such as excise duty and service tax for a nationwide, common taxation regime.
The CGST will give powers to the Centre to levy tax after excise and service taxes and additional customs duty are subsumed. The IGST will be a tax on inter-state movement of goods and services.
The states will pass the state GST or SGST law that will allow them to levy sales tax after VAT and related taxes are counted.
The UTGST is for Union territories such as Chandigarh and Daman and Diu.
In the backdrop of a reconciliatory mood, parliamentarians cutting across party lines showed consensus that the new indirect tax is the biggest reform since Independence and is the need of the hour.