Nitish Kumar Calls Arun Jaitley With Special Offer For GST
PATNA: The government has to really beat the clock to meet its deadline of implementing the Goods and Services Tax or GST in April next year. The proposal for the GST, India’s biggest ever tax reform, was cleared by the Rajya Sabha yesterday, in what has been described as one of Prime Minister Narendra Modi’s biggest wins since he came to power.
It’s guaranteed an easy passage in the Lok Sabha, where the government has an ample majority. Then, the GST must be cleared by at least 15 of the 29 states – the government today said it wants to get this accomplished within the next 30 days.Bihar Chief Minister Nitish Kumar, usually not in league with Prime Minister Narendra Modi, has said he’s ready to do his bit for the GST, which replaces a messy retinue of tariffs with a national sales tax, making it easier to do business
The Bihar Assembly ended its monsoon session today, but Mr Kumar phoned Finance Minister Arun Jaitley, offering to convene a special sitting to sign off on the proposal. The Chief Minister has earlier said that the GST could add about 8,000 crores to Bihar’s revenue every year.
What parliament and then states are in the process of approving is an amendment to the constitution that gives the government new taxation powers. Then, separate legislation will be sent for review on the rate of the new GST, as well as its scope.
State governments widely support the GST because it will boost their share of taxes and make cross-border trade far smoother. Their representatives will collaborate with the Finance Minister on deciding the rate. Though an 18% rate has been proposed by the government’s own chief economic adviser, Finance Ministry officials say the tax is likely to be higher. The main opposition Congress party has said it will campaign against the GST if it is not capped at 18%.
States that produce goods have been assured that they will be compensated for five years by the centre for the losses they will incur since the GST is applied on consumption. Experts warn that the challenge of setting up a new IT system, training up tens of thousands of tax officials and briefing companies on the change could delay the GST launch considerably
