Rajya Sabha today discussed the controversial GST (Good and Services Tax) as Finance Minister Arun Jaitley introduced the 144 constitutional amendment which paves the way for the roll out of the uniform tax structure across the country.
Government is one step closer to passing it in Rajya Sabha. GST would replace the multiple indirect taxes levied on Goods and Services without any discrimination on the goods or services purchased by the consumers.
As a side effect of the the GST States would loose the revenue because the state Governments’ taxes such as VAT would be part of the GST which would go the central government. However Union Government has assured states that it would compensate the losses.
In 2014, the NDA moved an amended Bill taking into consideration the suggestion made by the Parliamentary committee. The Bill was cleared in the Lok Sabha with the support of regional parties, while Congress opposed it in the present form. All the sates have supported the GST except Tamil Nadu and Gujarat.
GST bill makes a major amendment to the constitution which will strip state government right to set the tax rate based one their state’s socio and economic conditions. Due to this some sates governments and parties feel that GST is big blow to the federal structure of India and states would not be able to set their own tax such as VAT, Octroi etc,. The states feel that they have to beg the Central government to share the revenue and it fear that party in power at the center may use this as a blackmailing tool.