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. Distributors will have to pay Central GST (CGST) or State GST (SGST) of 9% each, depending on whether they supply within the state or outside the state.
Finally, the day is here in India's landmark reform to enrolled new tax system GST the Goods and Services tax from today. All goods and services taxes are slated into four slab rates i.e., 5, 12, 18 and 28 percent along with a cess on luxurious products.
'When the tax system becomes more efficient, the tax base increases and it becomes possible to make tax rates reasonable.
The GDP also grows as the size of formal economy grows, he added.
Scope of tax evasion remains a problem because of the exemption of businesses with less than Rs 20 lakhs annual turnover.
On the other hand, there were proprietors using the cash memo and providing hand written bills after levying GST.
The GST Council had its 18th meeting.
The GST, India's biggest tax reform since Independence, is scheduled to be rolled out from July 1. The government dismissed that idea, but at least one industry grouping the Associated Chambers of Commerce and Industry of India urged a delay, saying the government's own computer networks are not yet ready for the change. Here, still 25% of the population is poor.
"It (GST) is a tribute to the maturity and wisdom of India's democracy. They have been denied time", he said.
He said small, medium and micro scale entrepreneurs and traders will be affected in a "big" way because they are not ready for the roll out of the new law. Traders did not order new stock.Since there was no clarity over tax rates and billing, traders shut their shops for a few hours.
'That would be highly inflationary. It will give us more strength to move ahead together. "In market economics, one trader will not price the product higher when someone else is selling it at a lower rate and lose business". Businesses would have to file 37 annual tax-fillings - at three a month and one annually.
He also clarified that the scope of GST was not limited just to the financial system but social reforms as well. GST rollout: Get Set for Turbulence.
"GST is a simple, transparent system that prevents generation of black money and curbs corruption", the prime minister said.
'That can lead to some disruption.