The historic constitutional amendment that would pave the way for a common goods and services tax (GST) system got Parliament’s nod on Monday after the Lok Sabha agreed to the amendments moved to the Bill in the Rajya Sabha last week. AIADMK, the only party to oppose the Bill, staged a walk-out.

With this, the action now shifts to the States, as the Constitutional Amendment Bill requires the nod of at least 50 per cent of State assemblies for it to become law.

The constitutional amendment is crucial as it would confer the Centre with the power to tax at the retail stage and also allow the States to tax services.

In his intervention during the discussions, Prime Minister Narendra Modi said GST would be a “catalytic agent” in strengthening the federal structure of India and would benefit both “small traders” and States.

“This (introducing GST) is a gigantic step that will give us freedom from tax terrorism. It will eradicate both corruption in tax collections and also poverty. It will prevent creation of black money.

“There will be uniformity in the tax system and the consumer will be king. By implementing GST, States will also have more income that could be used for their development agenda,” Modi said.

The Prime Minister lauded all political parties for putting “national interest” ahead of their “political interests” and coming out to support this “transformative” piece of legislation.

Describing GST as “Great Step by Team India’, Modi also said that it would be ‘Great Step towards Transformation’ and ‘Great Step towards Transparency’.

Meanwhile, the Lok Sabha which considered the 10-odd amendments moved in the Rajya Sabha last week, passed the amendments, as AIADMK staged a walkout from the Lower House, as it had done in Rajya Sabha last week. The AIADMK’s contention is that Tamil Nadu’s concerns on GST had not been addressed by the Centre. In reply to the discussions on the amendments in Lok Sabha on Monday, Finance Minister Arun Jaitley expressed confidence that GST — like the value added tax system — would be a “win-win” for both the Centre and States.

“GST will expand the tax base, plug leakages in revenues and also increase the quantum of tax collections,” Jaitley said.

Responding to Lok Sabha Deputy Speaker and AIADMK leader M Thambidurai’s query on what the situation will be after the five-year period, till which manufacturing States will be compensated for any revenue losses, Jaitley said this query was more “a fear of the unknown.”

“These fears (losses will continue beyond five years) are exaggerated. GST is only going to bring additionality of taxes into your kitty,” he said.

Jaitley also said the aspect of “anti-profiteering” clauses would have to be considered by the GST council and there won’t be need for Parliament or State legislatures to consider it right now.

Congress leaders Mallikarjun Kharge and Veerappa Moily demanded that the standard rate be capped at 18 per cent. Moily even said that Centre and States should desist “profiteering” tendencies, noting that any rate above 18 per cent would be burdensome for the middle class and the poor.

Congress also wanted Jaitley to give an assurance that subsequent Bills — Central GST law and the iGST law — would only get introduced as financial Bills and not as money bills. However, the party did not get its way on both these demands.

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