Implementation of the Goods and Services Tax (GST) will reduce tax evasion and improve ease of doing business by engendering a common market throughout the country, Finance Minister Arun Jaitley said on Monday as he moved the modified constitution amendment bill in the Lok Sabha.
"GST will ensure one tax in the entire country. It will result in seamless transfer of goods and services in the country…This is a major indirect tax reform which will in long run will be in interest of the country," he said, adding Centre has addressed concerns of all the states.
The Lok Sabha, which had already passed the GST Constitution Amendment Bill in May 2015, took it up today again to approve the modifications made in it by the Rajya Sabha last week. The government had moved six official amendments, including scrapping of 1 per cent additional tax.
On the vexed question of GST rate which may have implications for inflation, Jaitley said it would be decided by the GST council, which will comprise representatives of centre and states.
As regards the issue of states giving up sovereign power to levy taxes, the minister said it is not the case, "states and the Centre will be pooling in their sovereignty together and creating a new mechanism which will take all its decision within that pooled sovereignty."
Appreciating political parties for showing unanimity in passing the bill in the Upper House, he said, "it is an important legislation and divided Parliament passing the country would not benefit the country."
The Minister further said the new tax regime will "check leakages, increase tax base for centre and states, eliminate cascading effect of tax on tax, reduce tax evasion and improve ease of doing business."