Bihar- Second State to Ratify GST Bill

Bihar became the first non-Bharatiya Janata Party (BJP) state to ratify the constitutional amendment bill needed to roll out the proposed goods and services tax (GST) on Tuesday.
Its legislative assembly and council approved the landmark legislation, making it only second to BJP-ruled Assam which ratified it last week.The BJP-led National Democratic Alliance (NDA) needs at least 16 states to ratify the bill. The alliance is in power in 14 states.

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Significantly, though Kumar’s Janata Dal United (JDU) is politically opposed to the NDA, he was among the first chief ministers to offer to call a special sitting of the legislative assembly to ratify the bill.The GST is a far-reaching tax reform that aims to create a common market and remove all tariff barriers across states.

It will subsume most of the indirect taxes levied by the Centre and states, including excise duty, service tax, value added tax, luxury tax, entertainment tax and entry tax. The bill was passed by a voice vote with all the key political parties in the state, including the JDU, Rashtriya Janata Dal (RJD) and BJP in its favour.

The Communist Party of India (Marxist-Leninist), however, staged a walk-out from the legislative assembly ahead of the vote. The bill was later ratified by the legislative council, too.

Objectives

The GST Bill was passed by both the houses of parliament last week. Despite being passed by parliament, every state will have to ratify it separately. Assam became the first state to accept the unified tax reform, and now Bihar has followed its footsteps to unanimously accept the GST Bill in the state legislative assembly.

The ruling alliance of JD-U, RJD and Congress along with the opposition party BJP agreed to the new bill. The new bill will bring an array of changes to the current system of tax generation. The new bill will be able to generate an additional 8000-9000 crores in revenue for the state, depending on the final law. As many as 15 out of 29 states will have to pass the bill for it to become the law.

Here are the key aspects of the bill

  •  The Bill will affect 20-25 lakh tax entities in the country and will be implemented in 29 states and 2 union territories
  •  Every dealer would be identified with a 13-15 digit unique TIN which would facilitate the dealer for taking care of compliances and would link the credit mechanism. All dealers would accordingly have to upgrade their IT systems and align the same with the vendor account and the customer account
  •  GST implementation will reduce the statutory compliances (such as issues of statutory forms, toll tax, waybills, etc)
  •  Unified tax laws will change the current system of different point of taxation, treatment of discounts by each state law, etc. Thus, the dealer might have to structure his business
  •  With free movement of credit, dealers might re-negotiate with its vendors on the strength of reduced costs.

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