With the Rajya Sabha yesterday voting to approve the constitutional amendment that will help usher in the Goods and Services Tax (GST), the country took a big step towards a comprehensive tax change and single biggest reform initiative.

The government estimates that GST will radically transform the $2 trillion economy and help boost GDP by up to two percentage points.

Union finance minister, Arun Jaitley said GST regime is an example of federalism at its best and will go a long way in boosting the revenue of both the central and the state governments. “Enactment of the GST bill will bring about the best economic management of the country as it will empower the states and increase revenue of the states and the central governments. It will give a boost to the economy at this critical stage”, he said.

While much work remains to be done before the levy can be rolled out, Jaitley said he is optimistic about getting it in place by April one next year.

The changes to the constitution (122nd Amendment) bill 2014, cleared by the Rajya Sabha yesterday will have to be ratified by the Lok Sabha and subsequently get approval from 50 per cent of state assemblies. It will then be approved by the President, triggering off the rest of the process that will culminate in the roll out of the tax.

Giving his reaction to the bill, West Bengal finance minister Amit Mitra said that GST is going to benefit SMEs the most as it will cut bureaucracy and the existing tax structure.