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GST culmination of 14-year-old journey: President Pranab Mukherjee

President Pranab Mukherjee addresses Parliament's Midnight Session on GST. Photograph: (Twitter)

WION Web Team New Delhi, Delhi, India Jun 30, 2017, 07.47 PM (IST)

Indian President Pranab Mukherjee, who along with Prime Minister Narendra Modi, officially launched India's Goods and Services Tax (GST) in Parliament, gave a rousing speech at a Midnight Session Friday, especially convened for launching the landmark tax reform.

Calling the GST launch a "historic moment", the President said it was the "culmination of a 14-year-old journey which began in December 2002."

"This historic moment is the culmination of a 14-year-long journey which began in December 2002 when the Kelkar Task Force on Indirect Taxes suggested a comprehensive GST based on Value Added Tax (VAT) principle.

"The proposal was first mooted in the Budget Session of 2007. The responsibility of preparing a design and plan of action for implementation of GST was assigned to an empowered committe of finance ministers. They released the first discussion paper on GST in November 2009," he said in his address at Parliament's Central Hall.

The President said the introduction of GST was a "moment of precedent" for the country and a matter of personal satisfaction for him because as finance minister he had introduced the constitutional amendment bill in 2011.

 

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"I had always believed that GST was a matter of time and was happy when it was enacted and I gave assent to the Constitution amendment last year," he said.

"I was closely involved in the design and implementation of GST as the then Finance Minister. I also had the privilege of giving assent to the Constitution (One Hundred and First Amendment) Act, 2016 (the GST Act)," he added.

Pranab Mukherjee said, "It is also a moment of some satisfaction for me personally because, as the Finance Minister, I had introduced the Constitution Amendment Bill on March 22, 2011."

"I was closely involved in the design and implementation and had the occasion to meet the Empowered Committee of state Finance Ministers, formally and informally, as many as 16 times. I also met the Chief Ministers of Gujarat, Bihar, Andhra Pradesh and Maharashtra a number of times," he added.

The President said the new era in indirect taxation was the result of a broad consensus arrived at between the Centre and the states.

"It (GST) is a tribute to the maturity and wisdom of India's democracy. The GST will make exports more competitive and also provide a level playing field to domestic industry to compete with imports," said Pranab Mukherjee.

"Under the GST, the tax incidence will be transparent, enabling full removal of tax burden on exports. The GST will be administered through a modern world-class information technology (IT) system," he added.

"A key feature of the system is that buyers will get credit for tax paid on inputs only when the seller has actually paid taxes to the government. It (GST) will create a strong incentive for buyers to deal with honest and compliant sellers who pay their dues promptly. Success of major changes always depends on their effective implementation," he pointed out.

President Mukherjee called GST a "disruptive change" which would be met with initial resistance.

"GST is a disruptive change. It is similar to the introduction of VAT when there was initial resistance. When a change of this magnitude is undertaken, there are bound to be some teething troubles and difficulties in the initial stages. 

"We will have to solve these with understanding and speed to ensure that it does not impact the growth momentum of the economy," he added.

The GST, a uniform tax across the country, will replace more than a dozen indirect taxes levied by the centre and the states. It is expected to make doing business easier by simplifying the tax structure and ensuring greater compliance.

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