“On this truly historic occasion of the passage of the GST Bill in the Rajya Sabha, I thank the leaders and members of all parties…Our MPs must be congratulated for their path breaking decision to give India an indirect tax system for the 21st century,” Prime Minister Narendra Modi tweeted.
Finance Minister Arun Jaitley, who steered the bill over the finish line 10 years after it was first announced, was greeted with cake by his colleagues. “Happy birthday GST,” said parliamentary affairs minister Ananth Kumar.
The rate and the scope of GST, a single national tax which replaces multiple indirect taxes, are yet to be defined. The Congress and other parties have warned that it must not exceed 18 per cent. Mr Jaitley has promised all efforts to keep the rate “moderate.”
Before the vote, the Congress exchanged heated words with Mr Jaitley for his failure to assure members that the government will not attempt to bypass the Upper House as it pushes the landmark reform hereafter.
Mr Jaitley said both houses would have an opportunity to discuss key decisions on GST, but refused to assure members that GST-related bills, the next step in the complex implementation of the new tax regime, will not be brought as “money bills,” which the upper house can discuss but only the Lok Sabha needs to pass.
“No demand can overwrite the constitution,” was all the Finance Minister would say as he pledged to follow constitutional provisions and precedence. He emphasised that the government “has no intention of bypassing the Rajya Sabha.”
Through protracted negotiations, the government won the backing of most parties for GST on Wednesday, but the Congress has made it clear that the support does not automatically extend to the other GST bills.
The bill passed on Wednesday will now be sent back to the Lok Sabha, which had passed it last year, for the amendments to be cleared by the lower house. It will then need the President’s assent and the approval of 15 states, half of India’s 29.
A GST council will be formed with states and the centre as members. This council will recommend rates and other modalities. Parliament will need to clear two more GST-related bills and each state will have to pass its own law. Mr Jaitley has said he is aiming for an April 2017 rollout of GST.