A 10-year-long wait came to an end on Wednesday with the The Constitution (122nd Amendment) (GST) Bill, 2014 being passed in the Rajya Sabha after all political parties arrived at a consensus.
The bill, which was first proposed in 2006, was stuck as the erstwhile United Progressive Alliance (UPA) and the National Democratic Alliance (NDA) failed to reach a consensus on the Bill for the last 10 years.
The Bill was passed with 203 ayes and 0 nays, an almost unanimous decision.
"This is a historic moment for India. GST is the biggest tax reform India has seen after the Independence," said Abhishek Jain, partner – indirect tax, Ernst & Young.
The reform, which subsumes all indirect taxes such as sales tax and excise tax, is expected to bring down the tax rates as India becomes a single market, allowing seamless flow of goods across state borders.
The GST will increase tax compliance as it has an in-built self-policing system, which will in turn increase the tax revenue of the government.
As far as common man is concerned, the reduced taxes will result in softening of prices in the medium term. This will help increase consumption demand, boosting the GDP.
However, Jain expects the prices of certain goods and services to rise initially.
"The prices will go up initially. But the impact will start trickling down in six months of implementation," Jain said.
MS Mani, senior director at Deloitte, also welcomed the passage of the bill and said it has set the stage for the next steps to make GST a reality.
"The next few days and weeks will determine the contours of the proposed legislation which has been rightfully hailed as a landmark reform. It is essential that trade and industry work actively with the government in providing constructive suggestions to iron out some of the key challenges in the new regime," he said.
Bhaskar Pramanik, chairman, Microsoft India called the passage of the Bill a "positive development". "The Government’s idea of a single tax regime is crucial to improve ease of doing business in India and addresses the ambiguities of the current indirect tax landscape, proving beneficial for the economy, at large,” he said.
There are apprehensions whether the government will indeed be able to roll out the GST by its stated deadline of 1 April, 2017. This is because there are many more steps to be taken before the Bill becomes a law.
First and foremost, the Bill has to return to Lok Sabha for approval as the present Bill is an amendment of the earlier version which was passed in the Lok Sabha.
After that, a minimum of 50 percent state legislatures have to pass the bill. Then it has to get the approval of President Pranab Mukherjee.
More over, the companies have to be prepared and the government has to put in place the systems.
However, analysts expect the GST to become a reality in 2017 itself. The maximum likely delay in rollout is three months.
The bottom line is, gear up for the GST booster dose by October 2017.