GST has been unanimously passed in Rajya Sabha.
In the biggest tax reform since Independence, the national sales tax or GST Bill was today approved by the Rajya Sabha to replace a raft of different state and local taxes with a single unified value added tax system to turn the country into world's biggest single market.
The 66-year-old Constitution, which gives power to Centre to levy taxes like excise, and empowers states to collect retail sales taxes, was amended though the 122nd Constitution Amendment Bill.
Prime Minister Narendra Modi said the GST will "also be the best example of cooperative federalism" and "Together we will take India to new heights of progress".
The legislation was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate during which a rare bonhomie was witnessed among the ruling and the opposition parties.
The government wants it to be implemented by April 1, 2017, already pushed back from the April 1, 2016 deadline set by FM Arun Jaitley last year.
Here is what happens now:
1) Since the Bill was passed in the Lok Sabha last year, there have been major amendments to it. So it will go back to the Lower House for approval.
2) Once approved by both the houses, the final draft will go to the state assemblies where the government needs atleast 50% of the 29 state assemblies to ratify the Bill before it is accepted.
It looks like this shouldn't be a problem since 13 states are governed by the BJP.
3) Once the Bill is ratified by the states, it will pave the way for the establishment of a GST council to finalise key things like the GST rate -- which is still not finalised and a key debating point -- the extent of the indirect taxes that will be subsumed under GST, and so on.
4) The government is aiming at an April 1, 2017 deadline for the rollout of the new taxation system, but according to a Reuters report, experts say that "slippage to July or October 2017 is increasingly likely."
5) A huge IT system has to be set up, tax collectors and officials have to be trained and companies brought up to speed on a levy that will force businesses to overhaul their systems, a Reuters report said.
(With inputs from agencies)
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