Home Retail Historic GST Bill passed: India becomes a unified marketplace

Historic GST Bill passed: India becomes a unified marketplace

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The Rajya Sabha on Wednesday voted to pass the Constitution amendment bill on , the most comprehensive tax reforms the country has witnessed since Independence.

16 states ratify GST, Bill ready for presidential nod
The new tax be implemented after a minimum of six months from the date of adoption of the GST law by the GST Council

203 members of Parliament (MP) voted in favour of the Bill while 13 members voted against after a five-hour-long debate which saw voices from both the Government and the Opposition speaking on the Bill and its various amendments.

AIADMK was the only party that expressed dissent with the Bill and called it unconstitutional. The MPs of the party staged a walkout during the voting process.

GST: India journey, and how other countries have implemented it

The Government says that GST will unite the country into a common market by removing all barriers across states. If implemented successfully, it is expected to add up to 2 per cent to the country’s gross domestic product, increase the tax base and ensure revenue buoyancy.

What The Prime Minister Said

Prime Minister Narendra Modi, in a series of tweets minutes after the Rajya Sabha passed the bill after over nine hours debate, said the decision on GST was “path-breaking” and it has given India an indirect tax system for the 21st century.

“On this truly historic occasion of the passage of the in the Rajya Sabha, I thank the leaders and members of all parties,” Modi said.

“This reform will promote Make in India, help exports and thus boost employment while providing enhanced revenue.”

“I would like to add that GST will also be the best example of cooperative federalism. Together we will take India to new heights of progress,” he wrote in another tweet.

GST: An Explainer 
GST in an indirect tax levied on goods and services that works on a destination principle. It is a tax on value addition at each stage of production as it allows setting off of credit on tax paid at every purchase in the supply chain.

GST subsumes all indirect taxes levied by the Centre and the states, including excise duty, service tax, value-added tax, luxury tax and entertainment tax. It will remove all barriers across states and make the country a common market. It is expected to add up to 2 per cent to the gross domestic product, once implemented successfully.

India will adopt a dual GST model wherein the Centre will levy the central GST and the states will levy state GST. An integrated GST will be levied on inter-state movement of goods. The entire tax registration, payment, tax return and refund system will be online and will be administered by the GST network.

In Retail, the passing of GST will benefit at different stages of the value chain including, the procurement of raw materials, movement of goods would become less cumbersome, which opens gates for more suppliers /vendors to merge, said a report in The Economic Times. Following this, a wider base of distributors would be available as state boundary paperwork will not be a hurdle, resulting to better access and low transportation costs. Much needed relief for the retail supply chain system which would reduce in transit inventory, further reducing the working capital requirement. Adding to this, simplified taxes and availability of input tax credits can help fetch better margins.