New Delhi:
As the Upper House has approved the Goods and Services Tax (GST) Bill after over a decade when it was first proposed, this can be seen as the biggest legislative victory for the Narendra Modi-led government at the Centre. However, there is a long way to go as the Centre needs to cross several hurdles to rollout the new tax regime from April 1, 2017.
The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014, as passed by the Rajya Sabha on Wednesday, will first go to the Lok Sabha again, since the Bill that had been passed by the Lower House on May 6 last year, underwent amendments to reach a political consensus.
The challenges ahead
The biggest challenge would be to get the state governments to expedite the passage of requisite legislation at their end. At least 50 per cent of the state assemblies need to ratify the Constitutional amendments. Once the Central GST law is cleared by Parliament, all states without exception must get their own GST laws passed.
The states will have to enact their own legislation for a state GST. This is because the GST regime will involve the imposition of Central and state levies at identical rates.
Once the Constitutional amendment is passed in Lok Sabha, it will need to be ratified by more than 50 per cent, or at least 15 of 29 Assemblies.
The GST Council can be constituted only after the Presidential assent for the Constitutional amendment.
For that, the Empowered Committee of the State Finance Ministers would have to arrive at consensus on complex matters such as tax rates, exemptions, threshold limits and dual administration – and get the approval of the Council on the same.
This will be followed by passing of a Central GST law in both the Lower House and the Upper House, the States’ own GST laws in their assemblies.
Another variable here is getting the infrastructure in place and familiarising the official machinery as well as enterprises to make the transition to the new system.
