GST Council will fix rates, Jaitley tells Lok Sabha

Finance minister Arun Jaitley today tabled the Goods and Services Tax (GST) Amendment Bill in the Lok Sabha, which, he said is supported by all political parties.

Moving Constitution Amendment Bill, Jaitley also said the centre has addressed concerns of all states on GST. The finance minister, however, left out the decision on the key rate cap to the GST Council, which will be set up after the Constitution Amendment Bill is passed.

''This is an enabling amendment, three more laws have to be created. Two of those have to come before Parliament,'' he said.

"GST is a massive reform in the country. I am thankful to all the political parties for making it happen," the finance minister said adding that majority of political parties have supported the GST.

Initiating the debate in the House, Jaitley said the GST Bill will pave the way for one country, one tax and one market. The cascading impact of a plethora of taxes will go after the GST roll out, he said adding the new tax regime will bolster revenues and improve finances of both the centre and state governments.

''If one pays tax at one stage, they won't have to give another tax on that tax component. So tax on tax will be eradicated,'' Jaitley said, adding, "Rates of taxation will be decided by GST Council."

While assuring full support to the GST Bill, Congress leader and chairman of the parliamentary standing committee on finance, M Veerappa Moily said the standard GST rate could not exceed 18 per cent. He also said the GST Bills should not be money Bills but Finance Bills.

GST, the biggest economic reform since 1991, is likely to sail through smoothly in the lower house of Parliament as the BJP has a clear majority in the House.

Once implemented, it will replace a raft of different state and local taxes with a single unified value added tax system and turn the country into world's biggest single market.

The bill passed by the Lok Sabha last year has now been brought back for approval after incorporating the amendments approved by the Rajya Sabha.

The GST Bill has to be ratified by at least 16 states in 30 days after it is passed by Parliament.

Once implemented, GST will subsume various taxes, including excise, services tax, octroi and other levies, and the proceeds will be shared between the Centre and the states.

Under the new GST regime goods would be taxed at the point of consumption, instead of the goods being taxed multiple times at different rates.

The GST, which was first proposed a decade back, is seen as potentially transformative for India's economy, adding as much as 2 percentage points to the GDP while also improving the ease of doing business and encourage investment in manufacturing.

It is also expected to result in greater tax compliance, boosting government revenues.