GST Bill gets Cabinet nod; likely in Parliament this session

Govt aims to roll out the GST from April 1, 2016

The Cabinet today approved the Constitution Amendment Bill on Goods and Services Tax (GST), clearing the way for its introduction in ongoing session of Parliament to bring about long-pending indirect tax reforms.

The Bill was approved by the Cabinet late this evening and it is likely to be tabled in the ongoing winter session of Parliament that concludes on December 23, sources said.

The government aims to roll out the Goods and Services Tax (GST) from April 1, 2016.

The revised Constitutional Amendment Bill was brought before the Cabinet after the Centre and states earlier this week reached a consensus on contentious issues, including those related to petroleum product taxation, which were holding up the proposed nation-wide indirect tax regime for about seven years.

The GST will subsume most of the indirect taxes like excise duty and service tax at the central level and VAT and local levies on the states front.

The GST Bill was last introduced in the Lok Sabha in 2011 by the then UPA government but lapsed, requiring the new NDA government to come with a new Bill.

Earlier this week in a compromise deal, the Centre decided to keep petroleum out of GST in return for states agreeing to entry tax being subsumed in the new tax regime.

On the issue of compensation to states for revenue loss because of subsuming of all indirect taxes in the GST, the Finance Ministry was to seek legal opinion on how it could be accommodated in the Constitution Amendment Bill that it wants to table in the ongoing Winter session of Parliament.

States, which earn over 50 per cent of their revenues from taxes on petrol and other petro products, wanted it to be out of GST so they could continue with levying different tax rates on these products.

In the three rounds of talks that held last week, states insisted that the compensation part should be included in the Constitution Amendment Bill.

The idea of moving towards the GST was first mooted by the then Finance Minister P Chidambaram in his Budget for 2006-07. Initially, it was proposed that GST would be introduced by April 1, 2010.