1. The Upper House of Parliament of India unanimously approved the crucial 122nd Constitutional amendment to turn the Goods-and-Services Tax (GST) Bill into law. Six amendments, including the one on scrapping the 1% additional tax, moved by the government were approved.
2. GST will make the country one unified common market. It is a single tax on the supply of goods and services, right from the manufacturer to the consumer. Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.
3. The GST would subsume various central (Excise Duty, Additional Excise Duty, service tax, Countervailing, Special Additional Duty of Customs, etc.), as well as state-level indirect taxes (VAT/sales tax, octroi, purchase tax, entertainment tax, luxury tax, entry tax, etc), numbering at least 17, thereby mitigating double taxation and creating one window for market operations.
4. The bill will now go back to the Lower House to incorporate the amendments approved by the Upper House of Parliament . The bill will also have to be ratified by at least half of all the State assemblies. After a majority of states approve the constitutional amendment, parliament must pass another bill to implement the tax. Then the states too will have to pass their own GST bills. The government has set 1st April 2017 as the date for introducing the GST.
5. A newly formed GST Council made up of federal and state officials would decide the GST rate, the exclusion list, applicability limits, principles of supply, special provisions to certain states, and a host of other rules and regulations. A technological backbone to link the taxation systems of the States and the Centre needs to be created and operationalized in the run-up to GST implementation.
6. It has generally been estimated that the GST can add as much as 2 percentage points to India’s gross domestic product as tax compliance improves.
7.FAQs on GST