Finance Minister Pranab Mukherjee today sought BJP support in getting a Bill on the Goods and Service Tax(GST) passed by Parliament during its month-long monsoon session scheduled to begin from July 26.
The Congress-led UPA government propose to enforce the GST from next financial year beginning April 1, 2011.
Mr Mukherjee sought cooperation of the principal Opposition party during lunch he hosted for BJP Parliamentary Party chairman Lal Krishna Advani and Parliament Opposition leaders Sushma Swaraj and Arun Jaitley, sources said.
Such luncheon meetings by leader of the House as Mr Mukherjee is in the Lok Sabha before every Parliament session are customary to discuss the business the government is to bring. But the sources said the Finance Minister during his conversation kept his focus on the GST Bill the government propose to bring during the monsoon session.
It is imperative for the government to get the Bill passed in the session if the new tax regime is to be enforced from April 1 because it has to put in place the necessary rules and galvanise the machinary for switchover to GST.
Introduction of new tax regime will mean abolition of other taxes such as Central Sales Tax, Excise Duty as also VAT and service tax.
A committee of state Finance Ministers has already given a final shape to the new tax law to be brought in through a Constitution amendment bill.
This tax reform when implemented will completely revolutionise the way the indirect taxes are levied in the country. GST is a consumer-based tax and not origin-based and as such it will be collected by the states where the goods or services are actually consumed.
However, some states like Madhya Pradesh and Tamil Nadu that produce surplus of goods are crying foul as their tax collections at source of production will be abolished, hitting their tax revenue.
France was the first country to introduce GST way back in 1954 for the single-point levy on the consumers at the end level instead of taxes at multiple levels. As many as 140 countries have adopted this consumer-based tax since.
All businesses whether engaged in sales or supply of the services will be covered under GST and they will have to recover the tax at the transaction level on the same lines on which they recover the state sales tax today.