The Union Finance Minister Arun Jaitley introduced the Goods and Services Tax (GST) Bill in the Lok Sabha today. On Wednesday, the Union Cabinet approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India to facilitate the introduction of GST in the country.
Commenting on the introduction of GST Bill in the Parliament today, Sachin Menon, partner and head, indirect taxation, KPMG in India, said, 'Introduction of the constitutional amendment bill is the most significant socio-economic fiscal reform in the history of India. This would help reduce the generation of black money and therefore corruption, at the same time increase the indirect taxation and income tax collection.
Menon further added that by introduction of constitutional amendment bill we have taken the first step towards implementation of GST. However we hope that too much of comprise by the central govt such as conceding to additional levy of 1% non-creditable tax in addition to GST does not dilute the advantages of GST.
Pratik Jain, partner, KPMG in India said, 'The speed with which the Government has introduced the Bill in the Parliament shows the seriousness attached with this important reform. The centre has shown enough flexibility to address the state''s concerns on critical areas such as compensation, inclusion of petroleum products etc. The fact that there is no constitutional embargo on levying GST on petroleum products is encouraging though the modalities of taxation on these products is still not clear. However, an additional tax upto 1% on inter-state supplies comes as a disappointment as any origin based taxation is fundamentally against the principles of GST and would be barrier to a common market which GST seeks to achieve.'
'Perhaps industry would be better off with a slightly higher State GST rate rather than continuing to pay any origin based tax like CST. One would hope that this aspect would be reconsidered and even if this tax applies, it would be temporary and not on all products,' Jain said.