GST bills must be passed in current sessions
Finance minister Arun Jaitley has said legislation related to goods and services tax (GST) will have to be passed in the ongoing budget session, pointing out that the Centre and the states would otherwise lose their right to collect indirect taxes after September 15.
Replying to debate on the budget in Rajya Sabha on Thursday, Jaitley said four bills supporting the Constitution amendment law on GST enacted last year will be introduced in the Lok Sabha shortly.
The government wants to roll out GST from July 1 this year and would need to get the relevant laws passed in the ongoing budget session to meet the deadline. The session ends on April 12.
The Constitutional Amendment law for GST was notified on September 16, 2016 and it provides for one year to switch over to the new indirect tax regime.
“After September 15 this year, the legal entitlement for collection of taxes will end. So, the alternative system has to come in place before September 15,” Jaitley said.
The government lacks a majority in the Rajya Sabha and therefore will need cooperation from the opposition.
The finance minister also said banks will be given more capital if needed, and claimed that the demonetisation was a big shock to the shadow economy and that formalisation of economy will increase going ahead.
The upper house passed the budget later in the day.
The union cabinet had cleared the GST laws earlier this week. The laws were cleared by the GST Council earlier in the month.
Jaitley said of the nine bye-laws that need to be framed for GST, four have been approved and the remaining five would hopefully be approved by March 31.
The cleared laws are Central Goods and Services Tax Bill 2017, Integrated Goods and Services Tax Bill 2017, Union Territory Goods and Services Tax Bill 2017, and Goods and Services Tax (Compensation to the States) Bill 2017.
Jaitley said the government stands by its decision on demonetisation as “it was eminently required in the larger interests of the Indian economy” though given the large use of cash some problems are inevitable.
He said cash accounts for 12.2% of the GDP, something that is not there in any country.
Jaitley said “a shock was necessarily required to be given into the system” but dismissed criticism that it has caused large disruption to the economy.
The finance minister said only 76 lakh people out of a population of 125 crore pay tax and out of that 61 lakhs are salaried people. He said the demonetisation has given a big shock to the shadow economy and with the focus on digitisation, the size of formal economy will increase going ahead.