The much awaited Goods and Services Tax (GST) Bill to bring in a uniform tax rate presented in the Rajya Sabha on Wednesday will bring about seamless transfer of goods and services across the country and it will enable to check evasion. The Bill will empower the states and will increase revenue of states as well as the Centre that will boost economic growth. The new Bill though there is a consensus among parties will replace a patchwork of central and state levies on goods and services and it is one of Prime Minister Narendra Modi’s biggest reforms since taking power in May 2014. The passage of the GST Bill will shore up PM Narendra Modi’s reform credentials. A uniform GST will tax consumers rather than producers and effectively create a customs union between 29 states. After Parliament, the Bill will then go to the states for ratification. Finally, a special GST Council, including state Finance Ministers, will need to agree on specifics including the tax rate. That could take another year or so. As it stands, the mooted reform will not cover alcohol consumption, electricity, real estate and petroleum products. Optimists hope that, over the years, these will be included. Pessimists fear the list of exemptions will only grow. Modi realises that the passage of GST Bill is crucial for him to silence his critics. Moreover, with the GST gaining tremendous national interest, Modi realises that the best political strategy is to isolate the ‘political party’ as the lone hurdle standing between the economy and the biggest tax reform of the decade. Except the Congress, most other major parties have given the nod for GST, which is expected to help India create a uniform taxation regime subsuming several different taxes and offering clarity to overseas investors. True, the BJP can’t entirely play the victim on GST. The BJP had hard-fought to block the crucial piece of reform when it was in opposition and one of the BJP leaders who were hell bent against GST was none other than Modi himself in his earlier Avatar as Gujarat Chief Minister. But, at this stage, that can’t be the reason for the Congress to take the revenge. The party, on the contrary, could use a temporary political defeat on the GST war as a tool to rebuild its shattered image.
