GST only a matter of time: Arun Jaitley

GST

As deadlock continues to loom large over one of India’s biggest pending tax reforms the Goods and Services Tax (GST), India’s Finance Minister Arun Jaitley has underlined that it is  only a matter of time before the constitutional amendment gets passed with almost all parties supporting it. Mr Jaitley, however, expressed doubts on meeting the April 2016 deadline.

The government has also decided not to call for a separate parliament session as it does not have the required numbers to get the constitutional amendment passed. The GST bill was passed in the Lok Sabha due to the majority the government enjoys in the house, but it could not pass through the Rajya Sabha as the opposition Congress has the maximum number of MPs in the House. The ruling BJP-led coalition is expected to take control of the Rajya Sabha after the 2016 elections where it is expected to get a majority in the house.

At present if the ruling party wants to get the GST passed in the Rajya Sabha, it would need the support of the opposition parties to ensure the legislation passes through the house. According to many economists and policy analysts, India needs to get the GST approved to rationalise the complex structure of taxes at the Centre and the state levels to boost the economy of the country. GST could add 2 percentage points to India’s GDP. The legislation could not be passed in parliament due to fierce opposition by the Congress party and others.

Speaking at the conference hosted by the Economist, he highlighted steel, power, electricity distribution companies, and to a lesser extent textiles and highways as the main sectors under stress. The GST is expected to be one of the biggest game changers if it clears parliament as it will lead to more transparency and structural tax reforms.

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