Maharashtra Legislative Assembly today ratified the Goods and Services Tax (GST) Constitutional Amendment Bill passed by the Parliament, at a special one-day session of the state legislature here today.
The proposal was passed unanimously by the Lower House, making Maharashtra the ninth state to ratify the GST bill, billed as the biggest tax reform since Independence.
Finance Minister Sudhir Mungantiwar, who tabled the resolution to ratify the bill, said Maharashtra would not incur any losses after GST comes into effect.
"Chief Minister Devendra Fadnavis has held detailed discussions on the GST bill with Union Finance Minister Arun Jaitley," he said.
"We have also allayed apprehensions of Shiv Sena on the bill," the state Finance Minister said.
Leader of Opposition in Assembly Radhakrishna Vikhe Patil said the ruling BJP should not claim credit for ushering in the GST era.
"GST bill is the offspring of Congress and BJP should not claim parentage. It was Congress which bore the 'labour pain' (on GST bill)," Vikhe Patil said.
"While in Opposition, BJP opposed this legislation. (Prime Minister) Narendra Modi, while he was Gujarat Chief Minister, also opposed it," the Congress leader said.
"BJP government always blames Congress for all ills afflicting the country, but on the other hand, implements many of our programmes and policies," he added.
In the 288-member Maharashtra Assembly, the BJP and Shiv Sena (SS) alliance has a majority of 185. With the Opposition Congress and NCP in favour of GST, the Lower House ratified the Bill unanimously.
Participating in the discussion in the Assembly, NCP
leader and former Maharashtra Finance Minister Jayant Patil said there was an apprehension that the state's fiscal autonomy would be dented as a result of the GST provisions.
"States which were so far lagging behind Maharashtra in development, will catch up with us as a result of the GST," he said.
"It is estimated that around 80 per cent middle class people will bear the brunt of inflation after GST comes into force," Patil said.
"There is a need to be alert as direct impact of GST will be felt on everybody, even people at grassroots," he adde.
The 122nd Constitutional Amendment Bill passed by Parliament needs at least 16 states to ratify it before it could be sent for Presidential assent.
Apart from Maharashtra, so far nine states -- Assam, Bihar, Jharkhand, Himachal Pradesh, Chhattisgarh, Gujarat, Madhya Pradesh, Delhi and Nagaland, have ratified the Bill.
Maharashtra, India's leading manufacturing state with a large service sector economy as well, is estimated to suffer a revenue loss if the GST rate is capped at 18 per cent.
"There will be revenue loss only on account of Octroi duty in Mumbai getting subsumed under GST. More revenue will be lost because GST will replace other taxes like central sales tax, value added tax, entertainment tax, and some other minor taxes," an official said.
The government has set a deadline of April, 2017 for its roll-out.
GST aims to do away with multiple-tax regime on goods and services and bring them under one rate. It will alter the present system of production-based taxation to a consumption-based one.
While manufactured consumer goods will become cheaper as the incidence of excise duty and VAT will come down from 25-26 per cent at present, the cost of services would by and large go up from the present 15 per cent levels.
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Shiv Sena MLA Sunil Prabhu, while participating in the discussion on GST bill in the Assembly, said Brihanmumbai Municipal Corporation (BMC) stands to lose around Rs 7,000 crore per year which it got through octroi, once the Act comes into effect.
"Instead of assuring compensation for this loss for five years, the compensation should be given for 25 years, so that Mumbai (BMC) does not have to beg before the state and Central governments," Prabhu said.
"Due to the loss of octroi revenue, big development works in Mumbai will be affected. The loss of this revenue will also adversely affect funds needed to provide health facilities to the 1.5 crore Mumbaikars," the Sena MLA said.
There is a 10 per cent annual growth in BMC's octroi revenue. So there should be a provision of increase in compensation to BMC by 10 per cent each year, he said.
"Efforts should be made to keep Mumbai's financial autonomy intact," he added.
Sena president Uddhav Thackeray has made some suggestions to Jaitley (on GST), Prabhu said.
