AKIPRESS.COM - India’s biggest tax reform, the Goods and Services Tax (GST) bill was passed by the Rajya Sabha (Upper House of Parliament) on Wednesday evening, reports Hindustan Times.

The bill – which will bring in a uniform tax – was passed by the Lok Sabha (Lower House of Parliament) last year, but remained stuck in the Upper House as the opposition raised issues over several of its provisions.

Prime Minister Narendra Modi took to Twitter to thank the leaders of all parties on the “truly historic occasion of the passage of the GST Bill in the Rajya Sabha”.

“We continue to work with all parties and states to introduce a system that benefits all Indians and promotes a vibrant and unified national market. This reform will promote [Make in India], help exports and thus boost employment while providing enhanced revenue,” he said in a series of tweets.

Soon after the goods and services tax (GST) bill got the assent in Rajya Sabha, Indian business leaders poured in messages of advice and congratulations.

“We congratulate the government on this significant milestone. In the process of implementing GST through legislations, we must collectively ensure there is no drifting away from the intent of the bill and the cornerstone principles of this Government in improving Ease of Doing Business and reduced tax related litigation in India,” said Abidali Z Neemuchwala, CEO of Wipro.

Chanda Kochhar, MD & CEO of ICICI Bank, the country’s biggest private lender, said the bill signals the government’s resolve to put in place a significant structural change. “Consumers will see lower prices in the medium term, businesses will able to operate more efficiently and the Government will see a broadening of its tax base along with ease of tax collection,” she said.

Under the new system, the states and the Centre will collect identical rates of taxes on goods and services. For instance, if 18% is the GST rate on a good across the country, the states and the Centre will get 9% each called the CGST and SGST rates.

The Centre will also levy and collect the Integrated Goods and Services Tax (IGST) on all inter-State supply of goods and services. The IGST mechanism has been designed to ensure seamless flow of input tax credit from one state to another.

There has been no agreement yet on rates of various goods and services, which remains a tricky issue. Last week state finance ministers told the Centre that the rate should provide relief to common citizens and small businessmen while not resulting in loss of revenue to states.

A panel under chief economic adviser Arvind Subramanian has recommended a revenue-neutral rate of 15-15.5%, with a standard rate of 17-18% be levied on most goods and all services.

The panel has recommended a three-tier rate structure wherein some essential goods will be taxed at a lower rate of 12%; so-called demerit goods such as luxury cars, aerated beverages, tobacco products at a higher rate of 40%; and all remaining goods at a standard rate of 17-18%.