Lok Sabha approves GST bill

The Lok Sabha today approved an amendment to the Constitution, which would pave the way for a uniform nationwide goods and services tax regime that would in turn help create a single national market.

The Lower House of Parliament passed the 122nd Constitutional Amendment (Goods and Services Tax) Bill with 336 Ayes, 11 Nays and 10 abstentions. The BJP had earlier in the day issued a whip to all its MPs to be present in the House during the voting.

Lok Sabha Speaker Sumitra Mahajan announced the bill was approved with the required two-thirds majority of the House.

The GST, which is proposed to be implemented from 1 April 2016, will subsume excise, service tax, state VAT, entry tax, octroi and other state levies.

GST would ensure seamless and uniform indirect tax regime besides lowering inflation and promoting growth in the long run, Finance minister Arun Jaitley said as he sought to allay concerns of the states that they would be hurt by its implementation.

However, he said, certain products like petroleum and alcohol have been kept out of the purview of the bill and have been kept under the domain of the states.

He also rejected a recommendation of an expert panel for revenue-neutral GST rate of 27 per cent, saying it was ''too high'' - the average global rate for GST is around 16.4 per cent - and would have to be ''much diluted''.

Opposition members moved several amendments to the bill all of which the fiancÚ minister rejected. Some members like Saugata Roy of Trinamool Congress and B Mahtab did not move any amendments after assurances from the finance minister.

Replying to the debate on the bill before Congress MPs walked out, finance minister Arun Jaitley said the proposal to reform the indirect tax regime has been pending for the last 12 years and that his predecessor P Chidambaram had first mooted it during the UPA rule.

Jaitley had moved the bill for consideration in the Lok Sabha on 24 April amid stiff resistance from the opposition parties, which wanted the bill to be referred to a standing committee.

The finance minister while moving the bill had said that the enabling bill will bring in a "win-win" situation and that states would be gainers rather than losers. (See: GST bill faces uncertain future in Lok Sabha)

The amendment seeks to do away with multiplicity of central and state levies.

Ahead of introduction of the bill in Lok Sabha, there was, however, no consensus among members of the empowered group of finance ministers with the Congress and even BJP supporters AIADMK and Biju Janata Dal opposing the bill citing differences on the issue.

The Congress party opposed the finance minister's move to introduce the bill without the issue being discussed by the Business Advisory Committee. AIADMK and Biju Janata Dal supported the Congress.

The GST Constitutional Amendment Bill, originally introduced in the Lok Sabha by the Congress government in 2011, had lapsed and the present government had to come up with a fresh legislation.

The Constitution amendment bill will require a two-thirds majority in both the Houses. The government, however, claims to have the consent of states, who are key stakeholders.

The bill will now go to the Rajya Sabha, where the ruling NDA has a limited voting strength, followed by approval by more than a half of the 29 states before the President can sign it into law.

"The whole country, which is one-sixth of world's population, would become a single market and therefore it would give a necessary fillip as far as trade is concerned," Jaitley told lawmakers.

Jaitley has called the goods and services tax (GST) the biggest reform since independence in 1947 that could add as much as 2 percentage points to the growth of Asia's third-largest economy.