On Wednesday, the Union Cabinet made a decision to drop a proposed 1% manufacturing tax, one of the three demands of the principal opposition party.
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In a move to secure wider acceptance of the long-delayed goods and services tax (GST) legislation, the union cabinet today approved changes to GST Bill, allowing states to get full compensation for loss of revenue for the first 5 years of the roll-out of the new indirect tax regime.
The Bharatiya Janata Party-led NDA government at the Centre expressed hope that the Congress won’t repeat its earlier mistakes and help in passing the GST Bill in the upcoming Monsoon Session of Parliament.
“What are the real intentions of this government vis-a-vis the GST Bill”, Yechury asked. Five hours have been allotted for the discussion on the bill in the Rajya Sabha, and the government is trying for a consensus with Opposition parties for the Constitution Amendment Bill to be passed by the Upper House.
Reports said Jaitley r met Leader of Opposition in Rajya Sabha Ghulam Nabi Azad, Anand Sharma and P Chidambaram. He said Opposing a bill which is badly drafted or which is flawed does not mean that Congress is opposing the reform. The cap is instead, likely to be a part of GST Bill that will be legislated separately by both the Centre and states.
“The state governments will be deprived of their only right to raise revenue as this right will be abolished with the Bill” as they would not be able to impose any cess even during an emergency or natural disaster, he said, adding that this was conveyed to the Finance Minister at the meeting. The environment in which the meeting was held was cooperative over the entire issue of GST, so that the Bill can be passed in Rajya Sabha and the GST can become a reality.
Analysts say GST will reduce cost of logistics companies by eliminating various state taxes and state boundaries. “It will force the states to come to the Centre with a begging bowl”, the CPI-M leader said.
On the issues Jaitley briefed about at the meeting, Yechury said it focussed on the capping of GST at 18 per cent and whether there will be some flexibility for states to take care of their revenues.
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The passage of the GST bill in the ongoing monsoon session will be crucial for the government to meet the 1 April 2017 deadline for the roll-out of the tax, which aims to unify the country into a single market by removing inter-state barriers to trade in goods and services.
