In a major breakthrough for the Indian economy, the Good and Services Tax or the GST Amendment bill was passed in Rajya Sabha unanimously. This bill was pending for the past 13-odd years or so. There is much speculation on what the bill is supposed to do. And what its end result will be.
Goods & Services Tax (GST) Amendment Bill For Dummies
GST bill aims at curbing the cascading effect of taxes. Which is to say it will check the current ‘tax-on-tax’, currently in play for the goods and services bought and sold. The currently prevalent Value Added Tax or VAT set out to achieve the same, but lacked in some parts. GST aims to fill those flaws. And be a central tax which reduces the overall tax burden on the common man.
A little Background
The GST bill was mooted as an idea way back in 2000. The Atal Bihari Vajpayee-led National Democratic Alliance government set up an empowered committee to come up with a GST plan. A plan which could help India better its indirect tax policy. Earlier, the Central VAT had, to quite some effect, removed the ‘tax-on-tax’ burden. However, the central taxes, additional excise duties, state taxes, and other surcharges were kept out of the ambit of this VAT. This in turn means that the manufacturers and dealers did not really get the benefits of tax-off. The bill aims to correct this shortcoming. And be a transparent, efficient system of indirect taxation, as has been adopted by over 130 countries around the world.
Opposition to GST as Money Bill
In layman’s terms, a money bill is the one that seeks to make amends in the way the money is taken from the central pool or the Consolidated Fund of India. The current GST bill has not been introduced as either a money bill or a finance bill for now. However, various political parties demanded that the finance minister gives an assurance that the bill will not be introduced as a money bill. Only the financial bills which contain provisions exclusively on matters listed in article 110 of the constitution become Money Bills.
On this basis, a bill is a money bill if it results in imposition, abolition, remission, alteration, or regulation of any tax at the union or state level but NOT at the local level. Further, it can be introduced only on prior recommendations of the President (or governor in the case of state). Moreover, it can be a government bill only. No private bill can be a money bill. A money bill is passed in Lok Sabha, it is transmitted to Rajya Sabha for its consideration.
Rajya Sabha, however, has limited powers in this context. It can neither reject nor amend the bill. Further, It can make only recommendations. It has to return the bill with or without recommendations to Lok Sabha in 14 days. The Lok Sabha may or may not accept the recommendations of Rajya Sabha. Whether or not accepted those recommendations, thus returned bill is considered passed in both houses. If Rajya Sabha does not even return the bill in 14 days, it is considered passed in both houses. The President can withhold assent to a money bill but cannot return it for reconsideration of the Lok Sabha. There is no question of joint sitting in case of money bills because the opinion of Rajya Sabha is immaterial in this case.
The Next Step
As of now the amendments to this bill, passed in RS yesterday, need to be passed in Lok Sabha with 2/3rds consensus. Once it is done, the Government be able to look at introducing a final bill in Rajya Sabha. In the winter session of the parliament, slated to start from November, the government will introduce two more bills. These bills are the Central GST and the Interstate GST or C-GST and I-GST. After the central government gets both the bills passed, at least 16 states would have to also pass the bill in their respective assemblies. The current GST range has been proposed between 17% and 19%. A final decision would be taken by the GST council, which will be decided on the final rates.
Till when to expect?
Though the government has set April 1, 2017, as its target to roll out GST, it is going to be a big task for the center to get all states on-board with the acceptable GST rate and the various other terms and conditions. Having said that, with the basic framework for the law in place, it should be easy for the government to talk to the states about it and decided on the course ahead.
