GST Bill will boost PM Modi’s reform credentials
NEW DELHI: Union finance minister Arun Jaitley on Wednesday tabled the Goods and Services Tax (GST) Bill in the Rajya Sabha and said that it is one of the most important tax reforms in the recent history.
“There has been a major consensus building that has taken place. I am extremely thankful to all opposition parties and I would especially like to thank leader of opposition Ghulam Nabi Azad,” Jaitley said in the Rajya Sabha.
Talking about the merits of the GST, Jaitley said that it would convert India into one uniform economic market.
“A uniform tax rate will bring about seamless transfer of goods and services across country and it will enable us to check evasion,” the FM said.
He said that the “GST Bill will empower the states and will increase revenue of states as well as the Centre.”
The finance minister said that the GST will boost economic growth that it will ensure that there is “no tax on tax”.
GST will boost PM Modi’s reform credentials
The Goods and Services Tax (GST) will replace a patchwork of central and state levies on goods and services and it is one of Prime Minister Narendra Modi’s biggest reforms since taking power in May 2014. The passage of the GST bill will shore up PM Narendra Modi’s reform credentials.
Once passed, the GST would be the most significant tax reform since Independence.
A GST will tax consumers rather than producers and effectively create a customs union between 29 states. After Parliament, the bill will then go to the states for approval. Finally, a special GST Council, including state finance ministers, will need to agree on specifics including the tax rate. That could take another year or so.
As it stands, the mooted reform will not cover alcohol consumption, electricity, real estate and petroleum products. Optimists hope that, over the years, these will be included. Pessimists fear the list of exemptions will only grow. Even with the expected exclusions, and based on a 17 to 18 percent standard tax rate suggested by a government-appointed committee, the GST might add 80 basis points to growth, HSBC economists reckon.
Take automakers like Maruti Suzuki and Hero MotoCorp. Analysts at Edelweiss reckon the new system could cut supply chain and inventory costs for the sector by up to 40 percent. If manufacturers lower prices for consumers, demand may also rise. Other sectors from cinemas to cement makers will also benefit.
Businesses have lobbied hard for the tax, with business lobby the Confederation of Indian Industry (CII) estimating the GST will add 1.5 to 2 percentage points to the annual economic growth rate.
“It is very much in the category of what one would call a big-bang reform,” CII president Naushad Forbes said.
“It will be a huge benefit to ease of doing business, it’s a huge potential efficiency gainer. It’s a very significant potential contribution to the economy in the longer term,” he said.
-source:- http://timesofindia.indiatimes .com/business/india-business/GST-Bill-will-boost-PM-Modis-reform-credentials/articleshow/53522097.cms