The Bill that was tabled in the Lower House despite opposition, mainly from BJP-ruled states, seeks to amend the Constitution to confer simultaneous powers to the Centre and states to levy taxes on goods and services.
Now, the Bill is likely to be referred to the Parliamentary Standing Committee for scrutiny. The proposed GST will subsume most indirect taxes like excise duty and service tax at the central level and VAT on the state front, besides local levies.
"The GST would replace a number of indirect taxes presently being levied by the central government and the state governments and is intended to remove cascading of taxes and provide a common national market for goods and services," said the Statement of Objects and Reasons of the Bill.
However, crude petroleum, diesel, petrol, aviation turbine fuel, natural gas and alcohol for human consumption have been kept out of the GST ambit.
According to Ernst and Young Tax Partner Harishanker Subramaniam, "Finance Minister Pranab Mukherjee's decision to table the Bill is a positive development in the direction of tax reform. He was committed to bring it in the current session and he did that."
The Bill provides for creation of a GST Council to be headed by the Union Finance Minister. The Council will be empowered to recommend tax rates and exemption and threshold limits for good and services.
The Council, which is to be constituted by the President, is proposed to be chaired by the Union Finance Minister, with the Minister of State for Finance, in-charge of revenue, as member.
Besides, the minister in charge of finance or taxation, or any other minister nominated by each state government, will be members.
"Every decision of the GST Council taken at a meeting shall be with the consensus of all the members present at the meeting," the Bill said.
It also proposed a GST Dispute Settlement Authority, created by Parliament, to deal with grievances of the Centre and the state with regard to GST.
"The GST Dispute Settlement Authority shall consist of a chairperson and two other members," the Bill said.
The chairperson of the authority is proposed to be a person who has been a judge of the Supreme Court or a Chief Justice of the High Court, while the members shall be persons of "proven capacity and expertise in the field of law, economics or public affairs."