The Rajya Sabha passing GST Bill is a big leap in the tax reforms country will see in future. This revolutionary reform if ratified by all the states can meet the April 2017 deadline to bring in a uniform tax structure which would help in boosting industrial production thus keep the elusive GDP to the desired 8 point mark. Except AIADMK-ruled Tamil Nadu all parties and states gave their consent on Wednesday to the Bill which empowers Centre to impose an additional tax of up to 1 per cent on the inter-state supply of goods and services for two years or more. The Bill was moved by the Atal Bihari Vajpayee government in 2000 by setting 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. This is the second most important economic reform the country has undertaken after the opening of economy initiated by Congress-led P. V Narasimha Rao government in 90’s and steered by Finance Minister Manmohan Singh. It took 16 years for the Bill to cross a major hurdle in its forward journey. As far as Jammu and Kashmir is concerned Bill will not be extended to the State in the current form. The State’s contention is that the government is giving various tax exemptions to the industry. If the GST in present form is introduced all such exemptions have to be done away with. The challenge with the State is to keep the exemptions without breaking the GST chain. Unlike other states, J and K has most of the tax collection in its own kitty and it includes service tax as well. This is because the State enjoys a special status under the Constitution of India’s Article 370. Central Government is collecting central excise, central VAT and Income Tax in the J and K State besides the negligible customs duty. All other taxes are collected by the State set-up. J and K would require to promulgate a new law to enable the GST implementation, once it is rolled out across India.
