GST Constitutional Amendment Bill approved by Cabinet

NEW DELHI: The Union Cabinet on Wednesday approved the Constitutional Amendment Bill on Goods & Services Tax (GST), inching closer to the rollout of an ambitious indirect tax reform expected to raise revenues and boost growth. The government aims to implement GST by April 1, 2016 and has been working overtime to get states on board. The tax reform is a centrepiece of the Narendra Modi government’s economic agenda.

The government hopes to introduce the bill in the current session of Parliament. It may be introduced in the Rajya Sabha on Thursday. The tax reform measure has missed several rollout dates in the past due to lack of consensus between the Centre and states on a host of issues and the government is keen to get the bill approved in the current session.

Initially, petroleum will be kept out of GST but will be included in the new tax set up once states come on board. It may take two years but the government hopes to include it in the years ahead. Alcohol too is expected to be kept out of the comprehensive levy.

Additionally, the Centre has devised a levy of 1% above the GST rate on select items and is assuring the states full compensation for revenue loss for three years, followed by 75% in fourth year and 50% in the fifth.