The much delayed Goods and Services Tax (GST) has finally seen the light of the day with Rajya Sabha nodding on the same late on Wednesday.
However, this is just the beginning. A long and gruelling process is yet to follow before the Bill ultimately turns into the law and gets implemented from its stipulated deadline of April 1, 2017.
Prashant Pillai, country head - tax & accounting business at Thomson Reuters believes the government has strong resolve to implement GST Bill by April 2017. He suggested it is extremely critical that corporations while they review the impact of this change on their supply chain, also pay significant attention to enable technology changes that will achieve a smooth transition.
After GST becomes the law, the sectors such as automobiles and consumer durables are likely to see a positive wave while telecom, commercial vehicles, print media, cigarette and jewelry companies would be adversely impacted.
The GST will also give strong boost to the government's Make in India Initiative.
"We will have a wider tax base in coming time and a new federal structure in place which would remove the wrinkle effects of old tax regime. It's a big positive for consumers as well as industry," says Mustafa Nadeem, CEO, Epic Research, financial services provider.
However, there is still a significant amount of legislative and administrative process that lies ahead:
1. The bill will be sent to the Lok Sabha where it will be modified as per the amendments made in the Rajya Sabha.
2. The government then needs two third majority in the Lok Sabha to pass it. However, BJP has majority in the lower house and a quick clearence is guaranteed.
3. The bill will then have to be ratified by at least 50 per cent of the states. Concerns only lie with the Tamil Nadu government, as AIADMK MPs walked out over the GST voting.
4. The bill will then be sent to the President of India to obtain his signature. It is then the bill becomes a law.
5. The formation of a GST Council will be followed by setting up a constitutional body having representative from the centre and states. It will ensure uniformity of GST across the country.
6. The council will also decide the Revenue Neutral Rate (RNR) which will ensure no loss in aggregrate tax revenue for centre and state.
7. The parliament and state legislatures will need to pass GST bills that will detail the central and state GST rates and the classification of the goods based on the rates.
8. The process of a GST IT Network which will form the IT backbone has to be set up.
9. Finally, Laws on the Central GST, Intergrated GST and 29 seperate GST legislations need to be passed.
All this and more will be underway before the bill can kick off in the next fiscal year.