The Union Minister for Finance and Corporate Affairs, Shri Arun Jaitley holding a Press Conference on the Goods and Services Tax (GST), in New Delhi on August 04, 2016. The Minister of State for Finance, Shri Santosh Kumar Gangwar, the Minister of State for Finance and Corporate Affairs, Shri Arjun Ram Meghwal, the Finance Secretary, Shri Ashok Lavasa, the Secretary, Department of Economic Affairs, Shri Shaktikanta Das, the Secretary, Revenue, Dr. Hasmukh Adhia, the Secretary, Department of Disinvestment, Shri Neeraj Kumar Gupta and the Director General (M&C), Press Information Bureau, Shri A.P. Frank Noronha are also seen.

On August 3rd 2016 at 21.40, the BJP led government passed the Goods and Services Tax (GST) with an absolute majority, in the Rajya Sabha (Upper House). This is despite the expected walkout of Tamil Nadu’s regional party AIADMK, led by former actress and current Chief Minister J.Jayalalithaa.

A version of the GST was first introduced in 2011 by the then Congress led government but was blocked by political manoeuvring. With the BJP in office, and the GST being raised again, Congress has been at the helm of opposition.

The Parliamentary passage is the first of many steps that will need to be taken before the Bill can ‘hit the ground’, but it is still seen as testament to political compromise and economic resolution. The Amendments to the Bill will now be passed by the Lok Sabha and subsequently has to be endorsed by at least 50 per cent of state legislatures for it to be signed into law by the President. It is hoped that GST will be ready in all phases by April 1, 2017.

At present indirect taxes amount to 24-26% on the value of goods sold, with the passage of GST, this aims to be capped at 18 %. In order to bring the states on board, and to allay any fears about loss of income with GST, the government has agreed to compensate states for any revenue losses, for a period of 5 years. This will also play a strong hand in securing the states legislature endorsements required to pass the Bill into law. Concerns have been raised about the potential short-term negative impacts of GST on job creation and macroeconomic indicators.

But there is general consensus that the long-term impacts of the GST will work in favour of India’s ambition to constantly improve the ease of doing business within the country.

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