The Narendra Modi government is racing against time to roll out GST from July, after successive governments have missed several deadlines.
The GST Council headed by finance minister Arun Jaitley has cleared all the five draft laws–Central GST (CGST), Integrated GST (IGST), Compensation Rule, State GST (SGST) and Union Territory GST (UT-GST) bills.
On March 16, the Centre and states approved SGST and UT-GST Bills that will enable states and Union territories to introduce the GST, billed as India’s biggest tax reforms.
On March 4, the council had approved the CGST and IGST Bills.
In the last meeting, the GST Council capped cess on demerit goods and luxury products at 15%.
The Modi government has been able to bring all states on board, overcoming almost a decade of political differences on how to replace a multi-layered set of central and state taxes and levies with a unified nationwide GST.
The ruling BJP’s victories in the latest assembly elections, especially in Uttar Pradesh, are expected to embolden the government to accelerate reforms and growth before the country heads for parliamentary polls in 2019.
The GST council has already approved two draft bills, for central and integrated GST. These will be tabled in Parliament and go to the states for ratification.
The unified tax will have four slabs of 5%, 12%, 18% and 28%. Farmers and small traders are exempt.
GST roll out is perceived to create a common market and help lower the tax burden, shore up government revenues, temper inflation and boost economic growth by at least two percentage points.
The GST legislation is likely to be taken up as money bills in Parliament this budget session, which restarted on March 9 after a month-long recess. The Rajya Sabha can’t reject money bills as it only has powers to make recommendations on such legislation, which the Lok Sabha can choose to accept or reject.
The passage of the bills will remove tax barriers, and subsume a host of indirect taxes levied by the Centre and the states, including excise, service, entertainment, entry, luxury and value-added taxes.