How many times have you heard ‘GST’ in about the last 12 months? Did you say uncountable? It has been the prime issue for so many Parliament sessions. But every time the news channels bombard you with debates on GST, do you wonder what exactly the core issue is? Why are the national parties at loggerheads? What does the enactment of the GST mean for you and me?

Scroll down, and find GST- UNPLUGGED.

What is GST?

The Goods and Services Tax Bill is officially known as The Constitution (122nd Amendment) Bill, 2014 and it proposes a national Value added Tax to be implemented in India. It was passed in the Lok Sabha on 6th May 2015, after the Opposition staged a walkout. It is yet to be passed by the Rajya Sabha.


What does the enactment of GST mean?

GST aims to switch the country into a unified market, replacing most indirect taxes with one tax. It will have a dual structure – a Central component levied and collected by the Centre and a state component administered by states.

At the Central level, it will subsume Central excise duty, service tax and additional customs duties. At the state level it will include value-added tax, entertainment tax, luxury tax, lottery taxes and electricity duty.

Central sales tax (CST) will be completely phased out. Entry tax or octroi would be subsumed from the start. Value added tax will be charged on each stage of value addition. At each stage, a supplier can off-set the levy through a tax credit mechanism. This means, the consumer pays GST added on by only the last dealer in the supply chain.


Where do the major political parties stand?

The Congress:

The Congress Party had raised objections to three points in the proposed bill. The party wanted an 18 per cent cap on tax to be levied, scrapping of the proposal to levy an additional one per cent tax and wants formation of a GST disputes settlement authority specified in the bill.

However, the Congress, which has been blocking the GST reform, has agreed to a five-hour debate on the proposal. No date has been set yet, but the agreement allows the bill to be introduced for consideration. This is a major breakthrough for the BJP government that has described the GST as the most important tax reform in decades.

The Left

The CPI-M maintains that the GST Bill has certain ‘weaknesses’ that are yet to be addressed by the government. The main contention is over the federal power that wrests with state governments.

The party has conveyed that it may agree if the government convenes an all-party meeting to discuss the issue and it is allowed to move amendments in Parliament.

Regional Parties

Almost all significant regional parties, except the AIADMK, have extended their support to the GST bill. Both major regional parties of Bihar, the JD(U) and the RJD, are backing the GST bill. In Uttar Pradesh, the Samajwadi Party and the BSP have extended their support to the bill.

What lies ahead?

Now that the Congress has agreed to discussing and negotiating on the GST, this spells good news for  BJP. Most parties have come around in supporting the bill, including regional heavyweights like Mamata Banerjee’s Trinamool Congress. However, it is yet to be seen how the GST bill unfolds during the Monsoon session of Parliament that began today.



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