Having brought consensus among states on the much-debated Goods and Service Tax, the central government will introduce the Constitutional Amendment Bill to introduce the new indirect tax in the current session of the Parliament. The government intends to roll out the new tax regime from April 1, 2016.
Making the announcement on Wednesday, Finance Minister called the new taxation regime a “win-win for all”.
"In view of the near unanimous support of states, that it is going to be a win-win situation for all, we will go ahead with the Constitution Amendment in the current session of Parliament," Finance Minister Arun Jaitley told reporters after a meeting with the members of the empowered committee of Finance Ministers of various states.
Introduced in the Lok Sabha in December, the bill on Goods and Services Tax envisages a single rate of GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax on goods and services to ensure seamless transfer of goods and services.
"I will be giving notice (so that it can be) taken up for discussion in the Lok Sabha in next couple of days," Jaitley said.
While most states are now on board, Tamil Nadu remains skeptical over a bill being introduced in Parliament before there is consensus on actual rates and tax bands through the empowered committee.
Tamil Nadu Minister for Commercial Taxes and Registration M C Sampath said: "Current proposal of the Centre to introduce a Constitutional Amendment Bill on GST and then to evolve a consensus on various aspects of GST, especially the actual tax rates and tax bands, through the GST Council is not acceptable to us. Broad consensus on the critical issues should be evolved on these critical issues through the Empowered Committee before the enactment of the Bill is taken up."
The GST legislation, being a Constitution Amendment, will require support of the two-third members of Parliament and thereafter ratification by half of the states.
"Today, the positive is (that) states are quite determined and they see the obvious benefits of the GST. The concerns cut across party lines and it is a genuine relationship between the centre and states. Broadly, the approach of the states and centre is converging in the same direction," he said.
Minister of State for Finance Jayant Sinha said: "We see no obstacles that will interfere with the April 1, 2016 timeline for GST. We are trying our best to work up to an endeavour where, with the support of the IT backbone that has been created, we try and maintain the target date of April 1, 2016. We are quite optimistic about that target," Sinha said.
Jaitley said the empowered committee’s meet on Wednesday did not discuss the revenue neutral rate (RNR).
Currently pegged at 27 per cent, RNR will ensure there will be no revenue loss to states after GST is implemented. With the rate not currently taking it account taxation of petroleum products as well as the 1 per cent additional tax that states can levy as part of the GST, recalculation of RNR has become necessary.
The Bill has kept liquor out of the tax scheme, while petroleum products such as petrol and diesel will be part of the new regime from the date to be decided by the GST Council, in which two-thirds of its members will come from states. All decisions in the Council will require 75 per cent votes.
States can also levy an additional 1 per cent tax over GST to make up for any revenue loss incurred for the first two years.
Last week, Jaitley had claimed that the implementation of the landmark GST regime would increase India's GDP by 1-2 per cent.