Finance Minister Arun Jaitley has called GST the "single biggest tax reform since 1947". (Press Trust of India)
The government today introduced legislation billed as the biggest tax reform since Independence, with analysts hailing it as a "game changer" that would cut the cost of doing business and boost economic growth.
The long-awaited goods-and-services tax or GST will eliminate a slew of levies currently in place to create a single internal market.
One of the various reforms undertaken by the Narendra Modi government, the GST will swell public coffers by broadening the tax base, economists say.
Finance Minister Arun Jaitley called the GST the "single biggest tax reform since 1947" the year of Independence.
"We will formally take it (the GST) up in the next session" which begins in February, Mr Jaitley told the Rajya Sabha or upper house as the bill was introduced in the Lok Sabha or lower house.
"It is like creating internal trade liberalisation," said Mr Jaitley, who aims to have the reform take effect from April 1, 2016.
Mr Jaitley said his party, the BJP, had succeeded in getting India's 29 states to agree to the GST where the previous Congress government failed. He described the indirect tax as a "win-win situation" for both the centre and states.
The minister reassured India's states that the government would give "a Constitutional assurance" in terms of compensating them for any loss of revenue from the tax change.
The GST will end India's patchwork of taxes under which each state has used its powers under the constitution to tax different commodities at different rates. Creating a uniform tax structure is one of the most complicated reforms to achieve.
Enacting the GST requires a Constitutional amendment involving consent of a majority of India's states - some of which had objected to ceding their right to levy taxes - as well as approval by a two-thirds majority in both houses of Parliament.
While the BJP holds a commanding lead in the Lok Sabha, it is in a minority in the Rajya Sabha. Mr Jaitley said he did not expect legislators to hold back the GST now that he had the states on board.
Mr Modi had opposed the indirect tax when he was chief minister of Gujarat. But mindful of the need to close India's budget deficit and bolster a struggling economy, his government at the Centre has put its weight behind the plan.