After nearly seven-hour debate, the much-awaited Goods and Services Tax (GST) constitutional amendment bill was passed by the Rajya Sabha on Wednesday.
Hailed as the biggest tax reform since independence, the one-nation-one-tax regime will convert 29 states into a single market.
Investors have billed the GST as a "silver bullet" for India's economy that would supplant multiple central and state levies - a complex structure that inflates costs for businesses. The government aims to implement the GST from April 1, 2017. It is expected to add 2 percentage points to India's GDP, according to economists. (Also read: 10 stocks that will benefit from biggest tax reform)
The adoption of the GST regime will make manufacturing cheaper, leading to lower prices of a number of manufactured goods. On the other hand, services are likely to become costlier under the GST.
Prime Minister Narendra Modi hailed the passage of the GST Bill.
This reform will promote @makeinindia, help exports & thus boost employment while providing enhanced revenue. #TransformingIndia— Narendra Modi (@narendramodi) August 3, 2016
The actual GST rate will be decided over the next few months in consultation with state governments. During the debate in the Rajya Sabha, Finance Minister Arun Jailtey said the government will strive for a reasonable GST rate. (Read: GST passage 'historic', says Arun Jaitley)
MS Mani, senior director at Deloitte Haskins & Sells LLP, said, "The passage of the constitution amendment bill by the Rajya Sabha has set the stage for the next steps required to make the GST a reality. The next few days and weeks will determine the contours of the proposed legislation which has been rightfully hailed as a landmark reform."
Industry leaders welcomed the passage of the GST Bill. Anand Mahindra, chairman of the Mahindra group, in a tweet said GST will help unleash India's economic potential. (Read more)
GST Bill passed.India's enormous market--a caged tiger--will now be unleashed. GoodShowTeam India!— anand mahindra (@anandmahindra) August 3, 2016
The bill will now be sent back to the Lok Sabha, which had passed it last year, for the amendments to be cleared by the lower house.
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