The GST endgame

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The long GST saga seems to be drawing to a close, finally.

The Rajya Sabha will now debate the constitutional amendment bill for the overdue shift to a goods and services tax (GST), which will replace the confusing array of distortionary national and state levies.

The draft, thankfully, does away with additional tax on the movement of goods across state boundaries.

The states will also be compensated for revenue losses in the first five years of the new tax.The government has also promised to put in place a mechanism for the proposed GST council to decide on future tax conflicts between states.

The government has done well to heed the Congress’s sensible suggestions on some of these issues.

GST has seen several false dawns since P. Chidambaram said in his 2006 budget speech that a political consensus existed for India to shift to a new indirect tax regime by April 2009.

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