Finance minister Arun Jaitley on Friday introduced in the Lok Sabha the much-awaited bill to amend the Constitution for introduction of goods and services tax (GST), which he described as the biggest tax reform in Independent India.
The bill was originally planned for introduction on Monday but the government rushed in to introduce it on Friday to signal its eagerness to pursue reforms. It raised the prospects of an ordinance to amend the insurance Act in case opposition parties don’t let the government discuss the second bill that NDA is trying to push in the current session of Parliament.
“It is expected that introduction of GST will foster a common and seamless Indian market and contribute significantly to the growth of the economy,” the finance minister told reporters, adding that the government is planning a switch to GST from April 2016.The bill, finalized after a week of intense consultations with the states, addresses most of the concerns including allowing the states to tax petroleum products, which accounts for close to half the revenue for some of them, till they decide.Alcohol for human consumption is the only item that is being kept out.
At the same time, Jaitely promised that the Centre will compensate states for the losses incurred by them after the introduction of the tax to create a unified market.
In addition, service tax will also be included in the pool. Al though the finance ministry does not expect significant loss due to a more robust system, it has agreed to provide 100% compensation during the first three years, 75% in the fourth and 50% in the fifth year.
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