New tax era begins: 'Good and Simple Tax', says PM Modi as GST is launched
Goods And Services Tax Shows The Path To Economic Freedom
President Pranab Mukherjee and Prime Minister Narendra Modi launched the Goods and Services Tax (GST) by pressing a ceremonial button at a midnight sitting in the historic Central Hall of Parliament, heralding India's shift to a 'One Nation, One Tax' regime.
President Mukherjee described the new era in taxation as the result of a broad consensus between the Centre and states. "This historic moment is the culmination of a 14-year journey which began in December 2002," he said.
In his speech, PM Modi termed GST a "Good and Simpler Tax". He also called India's most sweeping reform an outcome of collective efforts. "At this midnight hour, we are together going to decide the country's march forward... The system we have chosen, the road we have chosen is not the thought of one party or one government. This is our collective legacy, the outcome of our collective efforts. I congratulate all previous governments for their contribution, and for making GST possible."
The PM also pointed out that the GST Council had its 18th meeting shortly before the launch. "It is a coincidence that the Gita also has 18 chapters," he said, adding, "Kuchha bill, pucca bill game will be over. The poor will benefit."
Former PM Manmohan Singh was not present as the Congress chose to boycott the event.
Three parties from the Opposition camp were also represented at the event. These were NCP, SP and JD(S). NCP's Sharad Pawar sat in the front row with BJP's LK Advani and Amit Shah. SP's Ram Gopal Yadav was also seen in the front row. BJD, TRS and JD (U) had also sent their representatives.
Earlier, Jaitley described GST as a journey to limitless possibilities and expanding horizons. "Both the Centre and states will work towards one goal — shared prosperity. It will be an India that will write a new destiny," he said.
The launch brought back memories of August 15, 1947, when India's first PM Jawaharlal Nehru made his famous "Tryst with Destiny" speech in Parliament.
If Nehru said at the midnight hour that "India would awake to life and freedom", the single, nationwide indirect tax will help create economic freedom, replacing more than a dozen Union and state levies and unifying a country of 1.3 billion people into one of the world's biggest common markets.
GST is expected to gradually reshape India's business landscape, making the world's fastest growing major economy an easier place to do business, and polishing PM Modi's credentials as a reformer before the 2019 national elections.
President Mukherjee also mentioned in his speech his meeting with Modi when the latter was Gujarat CM. Mukherjee was then the UPA's finance minister and was piloting the first Constitutional Amendment Bill in 2011 to usher in GST.
Parliament was all decked up with strings of 22,000 bulbs, new carpets and sound systems for the big night.
The last midnight event in the iconic building was held in 1997 to mark the golden jubilee of India's Independence. But unlike Friday's event, that was a joint session of Parliament.
In a last minute appeal, Jaitley and Information and Broadcasting Minister Venkaiah Naidu had appealed to the Congress to review its decision, but to no avail.
Hours before the launch, Congress Vice President Rahul Gandhi tweeted, "A reform that holds great potential is being rushed through in a half-baked way with a self-promotional spectacle #GSTTamasha"
Other Opposition parties which skipped the event were the Left parties, RJD, DMK and TMC. TMC chief Mamata Banerjee was also critical of GST, saying, "At the midnight of June 30, 2017, freedom and democracy stand to face grave danger."
"No false celebrations and PR tamashas will distract from the economic disaster this BJP government has been," said CPM leader Sitaram Yechury.
GST is expected to add as much as 2 percentage points to the GDP growth rate, besides raising government revenues by widening the tax net.
A four-rate structure that exempts or imposes a low rate of tax of 5 per cent on essential items and top rate of 28 per cent on cars and consumer durables has been finalised. The other tax slabs are 12 and 18 per cent.
Businesses and traders with annual sales above Rs 20 lakh are liable to pay GST. The threshold for paying GST is Rs 10 lakh in the case of north eastern and special category states.
The new tax regime will allow businesses to get offsets for taxes paid at different stages of the supply chain, mitigating the dangers of double-taxation. They will have to pass the benefits to the consumer under an anti-profiteering law that's being put in place.
However, some like senior taxation lawyer Arvind Datar have warned the government to be careful because of GST's likely impact on exports and the unorganised sector.