The Goods and Services Tax, which was passed by the Rajya Sabha has been portrayed as the biggest tax reform in independent Indian history. But what will it actually mean for India’s citizens? The GST, which subsumes all indirect taxes like excise, octroi and service tax into one overarching tax that applies across the country, is being projected as a panacea for all of India’s tax woes. But there’s still one big piece of the puzzle missing: the tax rate which will make the implementation a bit difficult. The GST rate would have to be set by the proposed GST Council, which will be headed by the Union Finance Minister and have state ministers as members. The Congress is opposed to states being given powers to levy 1 per cent tax over and above the GST rate. Also, it wants alcohol and petroleum products to be included in the GST regime. The Finance Minister said he is willing to speak to anyone who disagrees with him. So far, we have been speaking to the more accessible section of the Congress party. The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha by the Congress government in 2011, has lapsed and so the Modi government has had to come up with a fresh bill. The bill amends the Constitution and so requires a two-third majority in both houses to vote for it, already has the consent of states, who are key stakeholders. The BJP has a big majority in the Lok Sabha or Lower House and will not find it difficult to pass the bill in that House. But it is in a minority in the Upper House or Rajya Sabha and is struggling to pass key legislation in there. The GST once introduced would be able to address this prevailing divide and bring in uniformity which ultimately would be big a relief for the consumer. It is the consumer who is the worst affected due to such a faulty taxation system on goods and services. It is arguably the most important legislation on economic reforms but the rate difference will remain a hurdle. Winter session of Parliament which is due will see some hectic parlays on the subject.
