GST Bill makes good progress

Goods and Services Tax Bill makes good progress
Goods and Services Tax Bill makes good progress

PerformanceGurus staff

New Delhi

Billed as India’s most important tax reform, the proposed Goods and Services Tax (GST) law may finally become reality. On July 23, a parliamentary panel on the GST bill submitted its report with most of the political parties backing it, except the Congress, the Left parties, and All India Anna Dravida Munnetra Kazhagam (AIADMK).

In an effort to develop wider consensus on the Bill, the panel conceded to the demands from the state governments seeking compensation for five years for loss of revenue and also recommended that the 1% additional tax proposed by states should not be levied on goods not for sale.

Member of the Congress, the Left, and the AIADMK gave separate notes of dissent.

Now, the Government faces the arduous task of getting the Bill cleared in the Rajya Sabha where the Congress, the Left and AIADMK together have enough numbers to block it. However, a section within the Congress feels that blocking the passage of a Bill which is backed by several other opposition parties, may not be politically prudent for the Congress at a time when it is counting on the unity of the Opposition to stall proceedings of the parliament seeking resignation of top Bharatiya Janata Party (BJP) leaders in corruption cases.

Interestingly, the Bill was first mooted by the Congress eight years ago, but it was the BJP, and especially its state government of Gujarat and Madhya Pradesh which opposed the bill tooth and nail.

In its dissent note, the Congress suggested a an omnibus 18% GST on all goods including petroleum products and alcohol. It is also opposed to giving powers to the states to impose 1% additional tax.

The AIADMK and Left parties contended that the proposed GST council and some provisions of the Bill impinged on the legislative sovereignty of both the Parliament and State Legislatures. The AIADMK also demanded that the petroleum products and tobacco be kept out of the GST regime.

The report of the 21-member Committee, headed by BJP’s Bhupender Yadav, backed the demand of the states to compensate them for five years in lieu of the loss of revenue on enactment of the Bill. The provision will be incorporated in the Constitution (122nd Amendment) Bill as official amendment.

It also endorsed 19 other provisions like keeping alcohol out of the regime and leaving it to the GST Council to decide on timing of levying GST on petroleum products.

Making light of the Congress dissent note, Finance Minister Arun Jaitley said the government will go ahead with the procedure to enact the legislation in Parliament. The Lok Sabha has already passed this Bill.

“It is hardly a dissent note on the bill, it is a dissent against the Congress party’s own proposals which were originally given. Congress MPs are giving a dissent against the suggestions made by their own Chief Ministers…”

– Arun Jaitley, Finance Minister

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