The Goods and Services Tax came into force at the stroke of midnight on Friday. GST was in reckoning for last 17 years but it became reality on Friday. GST unified more than a dozen central and state levies but doubts remained if the transition to a national sales tax will be without any glitch.
The new tax regime was ushered in at a late night event in the historic Central Hall of Parliament, reminiscent of the midnight ‘tryst with destiny’ in 1947.
President Pranab Mukherjee and Prime Minister Narendra Modi pressed a button in a specially crafted box at the stroke of midnight to launch the new tax regime which overnight replaced the messy mix of more than a dozen state and central levies built up over seven decades.
The one national GST unifies the country’s USD 2 trillion economy and 1.3 billion people into a common market, an exercise that took 17 tumultuous years.
PM Narendra Modi at GST launch
Prime Minister Narendra Modi termed the new levy as “good and simple tax” that marks economic integration of India.
“There are 500 types of taxes that play their roles. Today we are getting rid of them,” Modi said. “From Ganganagar to Itanagar and Leh to Lakshadweep, it is one nation, one tax.”
The day marks a decisive turning point in determining the future course of the country, he said, adding GST would ensure one nation, one tax.
The GST, he said, is simple and transparent tax that will help curb corruption and check generation of black money.
Modi said GST will eliminate the compounding effect of the current multi-layered tax system as well as the cross-state tax heterogeneity by fixing the final tax rate.
It will reduce cost and save money, he said.
President Pranab Mukherjee at GST launch
President Pranab Mukherjee, who had as finance minister in the UPA government in 2011 piloted a constitutional amendment bill to bring in the GST, said the new indirect tax regime is a “disruptive change”.
“It is similar to the introduction of VAT when there was initial resistance. When a change of this magnitude is undertaken, however positive it may be, there are bound to be some teething troubles and difficulties in the initial stages.
“We will have to solve these with understanding and speed to ensure that it does not impact the growth momentum of the economy. Such of such major changes always depend on their effective implementation,” he said.
The launch was however boycotted by principal opposition parties like the Congress which termed it as “tamasha” (gimmick) saying it was being rushed in a “half-baked” manner as a “self-promotional spectacle”.
GST launch was a starry midnight
Top leaders, industrialists, economists and celebrities tonight descended to witness the launch of landmark GST at the historic Central Hall of Parliament which opened for a midnight ceremony for the first time in two decades.
The Parliament building complex was illuminated just like it is done on national festivals such as the Independence Day and the Republic Day.
Industry doyen Ratan Tata, RBI Governor Urjit Patel,
When Finance Minister Arun Jaitley entered the hall, Patel walked up to him to exchange pleasantries.
Thereafter, the minister walked up to Tata, former Empowered Committee chairman Asim Dasgupta and former economic affairs secretary Vijay Kelkar to greet them.
Almost the entire council of ministers and MPs from ruling alliance sat in the circular hall along with opposition leaders from the Samajwadi Party, the BJD, the NCP and the JD-U.
The Congress, the Left, the TMC and the RJD boycotted the ceremony.
NCP leader Sharad Pawar was seated with BJP president Amit Shah in the front row.
As soon as former deputy prime minister and senior BJP leader L K Advani arrived, Shah gestured him to take a seat on the front row. Advani then sat between Pawar and Shah.
SP’s Ramgopal Yadav was seated in the front row, so were Bhartruhari Mahtab of the BJD and AIADMK’s A Navaneethakrishnan.
Subramanian Swamy, a bitter critic of GST-Network—the IT backbone provider for the new indirect tax regime—was also present at the launch.
Former finance minister Yashwant Sinha as also Vijay Kelkar, who had first mooted the concept of GST in a report to finance ministry way back in 2003, were also present at the launch.
Tata, who sat on the eighth row initially, was requested by S S Ahluwalia to walk up to the initial rows. Tata then went to sit in the fourth row along with Dasgupta and Kelkar.
Media tycoon and Rajya Sabha MP Subhash Chandra, SP leader Amar Singh and Pawar’s daughter Supriya Sule were also present at the launch.
Among the bureaucrats, Commerce Secretary Rita Teaotia, DEA Secretary Tapan Ray, Finance Secretary Ashok Lavasa, apart from CBEC chairperson Vanaja Sarna and Revenue Secretary Hasmukh Adhia were present.
Opposition looked divided at GST launch
The Opposition tonight stood a divided house as NCP, JD(U), BSP, BJD, Samajwadi Party and Janata Dal(S) participated in the midnight launch of the GST, which was boycotted by the Congress, the Trinamool Congress, the Left and some other parties.
Ruptures in the opposition unity emerged barely a week after 17 parties joined hands to put up a joint candidate against the ruling NDA nominee for the July 17 presidential election.
The Congress, the Trinamool Congress, the Left, the DMK, the NC and the RJD and some other parties boycotted the event, dubbing it as a “tamasha” (drama).
The NCP, a key constituent of the Congress-led UPA, broke away from the Opposition ranks, with its chief Sharad Pawar along with Praful Patel and Tariq Anwar attending the event in the Central Hall of Parliament.
On behalf of JD(U), its Bihar unit chief and Rajya Sabha member Vashisht Narain Singh attended the event.
JD(S) supremo and former Prime Minister H D Deve Gowda also attended the programme, sharing the dais with President Pranab Mukherjee, Vice President Hamid Ansari, Prime Minister Narendra Modi, Lok Sabha Speaker Sumitra Mahajan and Finance Minister Arun Jaitley.
The BSP, which stood with opposition unity, was represented by two of their MPs - Veer Singh and Raja Ram.
The SP, which had initially announced the boycott, did a somersault by attending the event, saying it found no problem when the party had supported the GST bill in Parliament.
Leaders of the BJD and the AIADMK also attended the function.
The Congress, however, downplayed the cracks within the opposition ranks, terming it as a “one-off” development.
A senior Congress leader claimed that the opposition unity will remain intact during the 2019 Lok Sabha election.
Small traders nervous on GST launch
While the measure is billed as making doing business easier by simplifying the tax structure and ensuring greater compliance, businesses particularly small traders have been a bit nervous about the new tax filing system.
A train was stopped by traders in Uttar Pradesh and commercial establishments and wholesale commodity markets in some cities remained closed today in protest against the “hasty” rollout of GST.
While a general strike by traders in Kashmir has been called on Saturday, Uttar Pradesh and Madhya Pradesh witnessed sporadic bandhs. West Bengal, Andhra Pradesh and Telangana also witnessed protests.
TMC’s Mamata Banerjee feared it would bring back the dreaded “Inspector Raj”.
For some businesses, the GST is complex with four broad tax categories of 5, 12, 18 and 28 per cent, and myriad exceptions, as opposed to a simpler, flatter and broader sales taxes in other countries.
Switchover to the GST has added to the worries of businesses that are still recovering from the November 8 shock decision to remove 86 per cent of currency from circulation.