Parliament passes The Constitution (122nd Amendment) (GST) Bill, 2014
The Parliament passed The Constitution (122nd Amendment) (GST) Bill, 2014 after it was unanimously passed by the Lok Sabha by approving all the amendments made by Rajya Sabha earlier.
The bill now will go states (15 out of total 29 states) for approval as per Article 368 of Constitution as it constitutional amendment bill dealing with changes in the features of fiscal federalism.
The passage of bill will pave the way for the roll out of Goods and Services Tax (GST) i.e. uniform taxation regime across the country.
- GST is considered as great step towards transformation and transparency in tax regime.
- It will bring freedom from tax terrorism as it will be levied on consumption rather than production.
- GST will also benefit states which are considered backward states and also address the problem of imbalanced development.
- It will help to curtail black money as traders will be compelled to give proper bills.
Long term effects GST
- Eliminate multiple taxes on firms, thus help in ease of doing business.
- Lead to uniform, seamless market across the country.
- The uniform rate GST rate will check evasion and boost growth rates.
- Reduce logistic costs for firms due to elimination of centre-states taxes.
- Reduce the prices of capital goods and also boost economic (GDP) growth.
- The need for financial documentation will increase and thus reduce black money.
- It will also work as a catalyst to strengthen federal structure of the country.
Short term negative impacts
- First one or two years of implementation will see a negative impact of higher inflation.
- There will be also a temporary dip in growth before the economic fruits of a common national market kick in.
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