The Union Cabinet has approved amendments to the Constitution (122nd Amendment) Bill to launch the goods and service tax (“GST” ), incorporating some of the suggestions of the select panel of Rajya Sabha that should clear the way for the passage of this much awaited reform should Parliament function.

The key changes approved by the cabinet in the GST law is full five-year compensation to the states for possible loss of revenues, which is crucial to the government gaining support of states such as West Bengal and Odisha in the Rajya Sabha where the government lacks majority. GST proposes to replace most central and state levies with one single tax and is projected to add as much as 2 per cent to the country’s GDP.

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(Source: Economic Times)