As all of you know that yesterday night, the Rajya Sabha passed a bill to amend the Constitution to facilitate the rollout of the historic GST amid government's assurance that the tax rates would be kept "as low as possible". The Constitution (122nd Amendment) Bill, 2014 was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate during which a rare bonhomie was witnessed among the ruling and the opposition parties. Six official amendments, including the scrapping of one percent additional tax, moved by the government were approved with cent percent votes.
Earlier, the bill was passed by the Lok Sabha. It will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha. The bill will also have to be approved by 50 percent of all the state assemblies. AIADMK was the only party to oppose the measure and its members staged a walkout from the House to register their unhappiness over the bill which lays the ground for the rollout of uniform Goods and Services Tax (GST) regime that will subsume all indirect taxes including central excise duty and state VAT/sales tax.
So here is a ready reckoner on the issues surrounding the proposed tax reform and it will mean for the Indian economy. But first, let's know more -
What is Goods and Services Tax (GST)?
As the name suggests, it is a tax levied when a consumer buys a good or service. It is meant to be a single, comprehensive tax that will subsume all the other smaller indirect taxes on consumption like service tax, excise duty etc. This is how it is done in most developed countries. It will be a comprehensive nationwide indirect tax on the manufacture, sale, and consumption of goods and services. The aim is to have one indirect tax for the whole nation, which will make India a unified common market. GST will be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method and would make not just manufacturing but also the interstate transportation of goods more efficient.
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