The Goods and Service Tax (GST) bill on Thursday, finally became a law with the Indian President Pranab Mukherjee’s signature following clearance by 15 states in the country. Earlier in august, the GST bill was unanimously passed in both the Rajya sabha and Lok Sabha. The implementation of GST is likely to be discussed in the winter session fo the parliament. Though, it seems that the implementation would happen much sooner than the expected April 1, 2017, date. When implemented, the GST will be the biggest economic reform in the country since 1991.
The new tax regime would imply the implementation of a uniform tax rate throughout the country. This would open up new geographical zones and opportunities of many businesses. The state governments, though, were initially wary of the tax reform stating that the state would have to face heavy losses in revenues. The central government had then promised that it would pay the states for the loss of revenues for 5 years.
Many countries in the world have implemented this type of tax system for a long time now. While, the reform initially faced protests in a few nations, their economies gradually warmed up to it. The federation of Indian Chambers of Commerce and Industry (FICCI) had earlier told the finance ministers of the states that the new tax regime can only be implemented after a bare minimum time period of 6 months after the adaptation of the law by the GST Council. It had also suggested that the merit rate should be lower and the standard rate must be set at a reasonable price to check inflation.