The passage of four GST laws in the Lok Sabha on Wednesday — the Central GST Bill, the Integrated GST Bill, the Union Territories GST Bill, and one on compensating the States for the transition — could not have come as a surprise, but the furore it caused certainly did. The Opposition seemed nettled over an issue that has seen years of deliberation between the Centre and the States. The objections seemed to arise out of a general climate of political acrimony — made worse by the recent packaging of numerous rules and laws as Money Bills — rather than serious misgivings over the Goods and Services Tax as such. Even so, the passage of the four Bills marks a big step forward to a more consistent set of rates for goods and services across States, as against the jungle of Central and State levies and cesses that prevail today. The next step is for the GST Council to arrive at and recommend a set of rates, and the respective goods and services for each category. The ceiling rates are expected to be, besides 0 per cent, 5 per cent, 12 per cent, 18 per cent and 28 per cent; each of these rates would be the sum of CGST and SGST rates in the case of intra-State transfers, or the IGST rate in the case of inter-State transfers. The Council’s task is to ensure that the exempted list is as small and uniform as possible across States, besides persuading most States not to vary their rates too much from its prescribed bands.

The Opposition seems to be going too far when it fears that the GST Council will turn into a supra-Parliament. The Council, with votes weighted in favour of the States, is expected to operate consensually — and this has been a mark of the GST negotiations. The law allows the States leeway to depart from a recommended SGST rate, even if that would dilute the spirit of the exercise. Therefore, the challenges ahead lie not in procedural matters such as the passage of SGST laws, but in ensuring that the GST Council displays the leadership skills to carry everyone along. The finance minister should bear in mind that a trial run will help sort out teething troubles.

One such could lie in the software. The monthly filing of GST returns is ‘auto-populated’ — which means that a registered supplier (one with a turnover above ₹20 lakh) must upload all details of his transactions, with the tax element, which can actually be accessed by the rest in his supply chain, besides, of course, the tax authorities. Such humongous data gathering has not been attempted elsewhere, and the software should be tested. The capacity of State tax authorities, so far used to taxing goods and not services, to deal with the latter is an unknown quantity. The success of GST depends on political consensus, technology and the capacity of tax officials to adapt to the new requirements.