Prime Minister Narendra Modi said on Monday the consumer will be “king” under the goods and services tax (GST) that will liberate people from “tax terrorism” as Parliament cleared a bill to roll-out one of India’s biggest reforms, ending its five-year-wait.
Minutes before the Lok Sabha passed the 122nd constitution amendment bill, Modi called the GST “pro-poor” — echoing a plank used by the Congress to demand changes in the NDA’s version of the legislation.
The PM said the GST will check tax evasion, detect and curb black money and nearly eliminate the human interface between tax-payers and collectors.
“The GST will give people freedom from tax terrorism,” said Modi, highlighting the importance of the day that saw, in 1942, the start of the August Kranti movement, a part of the India’s independence struggle. He also announced all essential goods used by poor people will be kept out of the tax net.
The Lok Sabha voted 443-0 in favour of the bill, approving all nine amendments by the Rajya Sabha last Wednesday. The bill now requires clearance of at least 15 out of 29 states to be given the President’s approval.
After the states’ nod, the GST can create a common national market, replacing myriad state levies. The target date for the GST launch is April 1, 2017.
In Parliament, both the PM and finance minister Arun Jaitley maintained the states will gain under GST, brushing aside allegations they will forgo their financial sovereignty.
“States and Centre will be pooling in their sovereignty together and creating a new mechanism which will take all its decision within that pooled sovereignty,” Jaitley said.
Under the current system, levies are charged at multiple points and by different authorities – for example, by the police at check points or by state government agencies at inter-state borders. This encourages corruption that a common nationwide tax is expected to eliminate.
The GST bill was first proposed by the UPA government but political compulsions stalled the legislation since 2011. The legislation was the showpiece of the NDA’s reform agenda but could only be cleared after protracted negotiations with the Congress.
As many Opposition leaders spoke about their roles in passing the GST bill, Modi said, “People always talk about who gave birth to Krishna and who brought him up. This is not a victory of any party. This is a victory of the Indian democracy.”
The PM maintained parties came together to put “Rashtraniti” over “Rajniti” (nation over politics).
He dubbed the GST as a “great step towards transformation” and a “great step towards transparency”, drawing a parallel between the motto of “one nation, one tax” and the BJP’s poll slogan of Ek Bharat, Srestha Bharat”.
Often accused by Opposition of blocking the UPA-era GST bill as Gujarat chief minister, Modi said as CM, he had some apprehensions and consulted then finance minister Pranab Mukherjee.
Congress floor leader Mallikarjun Kharge, however, quipped later, “We are glad that what Modi could not understand as a chief minister, he could realise it as prime minister.”
Modi said backward states were “guaranteed to benefit” and could spend additional resources on social sector and infrastructure. He added that the consumer will benefit because of uniformity in tax rate and processing. The new tax will help and guarantee safety to small traders—a core vote bank of the BJP—he said.
Wrapping up his speech, Modi, however, didn’t forget to mention that his 100-week old government has passed more than 100 bills in Parliament.