In what could be called the most significant economic reform in India's taxation history, the Lok Sabha on late Wednesday evening passed the Goods and Services Tax or GST bill, ending decade-long uncertainty over its roll-out.
The Lok Sabha approved four supplementary legislations - Central-GST Bill, Integrated-GST Bill, GST (Compensation to States) Bill, Union Territory-GST Bill - after negation of a host of amendments moved by the opposition parties.
The GST will replace all indirect taxes levied on goods and services by the Central and state governments. While replying to the seven-hour-long debate, Finance Minister Arun Jaitley on Wednesday said the GST will make commodities 'slightly cheaper'.
However, the revised draft of the Central-GST bill suggests otherwise. It has brought some of the government services under the tax net which were completely exempted earlier.
Here's how GST will affect us
From birth certificate to Passport services
The GST council has put services like issuing of passport, birth certificates and driving license under 'business' category, that may invite tax once the GST is in force. Earlier, these services were under a list of exemptions.
GST on non-compete amount
Non-compete amount given by an employer to an outgoing employee - to ensure the person does not join a rival firm for a specified period of time - is likely to be taxed after further discussion by the GST Council meet on March 31, 2017. Explaining the reason behind the tax on non-compete amount, a Deloitte analyst said that the amount given is not a part of the contract signed by the employee and thus might get taxed.
From food vouchers to cab services
After GST is rolled-out, employees will have to pay taxes on freebies - food - and services - cab - provided by employers. Under GST, the employees will not be allowed to claim input tax credit on office gifts given by the employers. In other words, any service which is not part of employees' cost to company or CTC package may now attract tax.
GST on essential food items
There will be no tax on close to 50 per cent essential food items under the GST regime. The Finance MInister had said that the food items will be taxed at zero rate to keep a check on inflation. Under the GST common use products will be taxed at 5 per cent.
Last year in August, Prime Minister Narendra Modi said that almost all the commodities used by the poor had been kept out of the purview of the GST. "Close to 55% of the food items and medicines will not be taxed under the GST," the Prime Minister said.