The proposed countrywide Goods & Services Tax (GST) that will take India closer to being a one unified market is getting further delayed. The landmark amendment to the Constitution faces further roadblocks ahead, with yet another session of Parliament passing by without enacting legislation which is under consideration for almost a decade.
It is indeed a matter of historical irony that the Opposition party which first introduced the Bill in 2011 and has been championing the need for replacing the local and regional taxes that have caused red-tape, confusion and corruption with a single levy remains opposed to the Bill. It is expected to replace the complicated system of nearly 20 different taxes and levies imposed on commodities by different States, as part of the Prime Minister’s promise to streamline the Government and support business.
The GST will harmonize and simplify the indirect tax structure, reduce the cost or production and inflation in the economy and ensure India becomes a common seamless market. The manufacturers and traders will have advantages like one tax, a common market, no difference between goods and services, simple billing and common exemption between the Centre and the States.
The GST is a destination-based tax and the origin of supply will be the taxing point. Currently 144 countries have GST. The Government has targeted rolling out the new tax structure from April 2016, an unlikely possibility given the current impasse in Parliament. The system can be rolled out only when Parliament passes the Constitution Amendment Bill, with at least two-third of the members voting in its favour. In addition, at least half of the State Assemblies need to pass the Bill.
The delay in the passage of the Bill implies that India‘s indirect tax system will continue with multi-layered taxes levied by the Centre and State Governments at different levels, such as excise duty, octroi, Central sales tax, value-added tax, etc.
Though admitted all over that there should be uniformity in tax rates, there has been no co-ordination between the State and Central Governments on the issue. Associations such as the Federation of All India Automobile Spare Parts Dealers’ Associations (FAIASPDA) propose to carry on their agitation for uniformity in taxation till they achieve the desired success.
(Excerpts from the speech delivered by Mr. Gurmeet Singh Rawal, FAIASPDA President, at the 53rd AGM of the Association in Aurangabad.)