GST Bill faces Rajya Sabha test today: 10 things to know

The Goods and Services Tax Bill , which was passed by Lok Sabha on May 6, faces its actual test on Monday in Rajya Sabha.

Here are 10 things you need to know about the legislation:

1. The Bill intends to reform the tax system in the country by combining all the indirect taxes levied by the Centre and states, like excise duty, octroi, central sales tax and value added tax (VAT) among others, and implementing them via GST . In short, a uniform tax on all goods and services that will facilitate seamless movement of goods across states and reduce the transaction cost of businesses.

2. The Bill will also remove the loopholes that often lead to tax-on-tax as well as repeated tax on many items. This happens as a result of some indirect taxes being state subject while some of the Center.

3. The GST was initially announced in the 2007-08 budget and was slated to be introduced from April 1, 2010. But it has been constantly delyaed as the central government failed to gather consensus of the states on the same. The Modi government has now announced the date of April 1, 2016 for its implementation.

4. The delay was caused because the States were opposing the Bill as it will deny them the power to collect indirect taxes and hence, result in steep drop in tax collections. The deadlock between Center and states was resolved and a broad consensus was formed by the Central government agreeing to reimburse 100 per cent of the revenue losses to the states in the first three years, 75 per cent in the fourth year and 50 per cent in the fifth year.

5. According to the agreements reached between the Centre and the states, the Centre will collect GST and the states and the Centre will get equal share of the indirect taxes collected via the uniform indirect taxation system.

6. Currently, a car is priced differently in each state because of their varying indirect taxes. The implementation of GST will make India a uniform market.

7. Alcohol and tobacco will not come under the purview of GST.

8. The states wanted petroleum products to keep out of GST as they are a source of one third of states' indirect tax collections. The solution: States will collect sales tax/VAT on petro products while the Centre will levy excise duty on the same.

9. The 13th Finance Commission has estimated that as a result of implementation of GST the agricultural goods' prices will increase by 0.61-1.18 per cent and prices of manufactured items are likely to fall by 1.22-2.53 per cent.

10. If the Rajya Sabha refers the Bill to a Select Committee, the government has stated that it will not be able to keep its deadline of GST implementation of April 1, 2016.