NEW DELHI: Marking an end to the long and tumultuous debate on GST, the Rajya Sabha today approved the crucial 122nd Constitutional amendment to turn the bill into law. The Lok Sabha had already passed the key bill.
The bill 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 per cent of all the state assemblies.
Main opposition Congress and most other parties eventually came on board after having created considerable roadblocks, after Modi government's assurance that the tax rates would be kept "as low as possible".
The Constitution (122nd Amendment) Bill, 2014 was approved by the Rajya Sabha with 203 votes in favour and none against. The debate witnessed a rare bonhomie among the government and the opposition.
Six amendments, including the one on scrapping the 1% additional tax, moved by the government were approved. The new regime will now subsume all indirect taxes including central excise duty and state VAT/sales tax.
After years of deliberation, the GST, touted as the biggest tax reform in Indian history since independence, has finally seen the light of day.
AIADMK was the only party that expressed dissent with the Bill and called it unconstitutional. The MPs of the party staged a walkout during the voting process.
The easy passage was made possible after Congress came on board after Modi government effected about six changes in the bill, including the incorporation of clearer provisions for compensating for the lost revenue for states for five years.
In the debate over the Constitutional cap on GST tax rate at 18%, FM Jaitley said the guiding principle would be to keep the "rates as low as possible, certainly lower than what it is today.
"Just as the income tax rate can't be levied at the whim of the executive, and needs legislative approval, the same must also hold true for the goods and services tax rate (GST)," former Finance Minister P Chidambaram said during the debate.
"Today we may not put the rate in the Constitutional amendment bill but we will have to put it in the central bill," Finance Minister Arun Jaitley said in his opening statement.
"Because of GST Bill, there is a permanent loss to state of Tamil Nadu and it will violates the basic structure of the constitution," A Navaneetha Krishnan of AIADMK said.
"Proud moment for all of India, compliment Parliament and the government of India," Uday Kotak, executive vice chairman and managing director of Kotak Mahindra Bank told ETNow
The passage of this crucial bill had been held up for many years owing to fierce political infighting. Its final advancement now marks a historic victory for Prime Minister Modi as he eyes a telling economic boost for Asia's thirdlargest economy.
Investors have billed the GST as a "silver bullet" for India's economy. They believe it would supplant multiple centtal and state levies, part of a chaotic structure that causes costs to balloon for businesses
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