Finance Minister Arun Jaitley will on Tuesday meet his counterparts in states to discuss the proposed amendments to the Goods and Services Tax (GST) Bill that has been passed by the Lok Sabha but is stuck in the Rajya Sabha. There is a trend that is emerging when it comes to GST bill and equation between BJP & Congress – every time congress party tries to converge on GST bill in order to support the most important tax reform bill, BJP sharpens its attack on the congress leadership i.e Gandhi family.
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The upper house has already allotted five hours for discussions on the Bill.
“The principal of GST rate has been decided, that it should provide relief to common man while not resulting in revenues to states”, said West Bengal FM and also chairperson of the empowered committee of Finance Ministers on GST Amit Mitra. It was discussed and conclusion reached that Union Finance Minister will communicate to other parties. “He will explain it to them that it can’t come in Constitutional Amendment but it can come in GST Bill or GST Act”, Mitra said. “There is deliberations happening on that issue”, Mitra told reporters after the meeting. “It can always be put in Constitution by the Congress at a later date when they have the numbers to do so but don’t hold it up now as it is something that will benefit the entire nation”, said RC Bhargava, chairman, Maruti Suzuki India. “This rate is to ensure that the total revenue after GST is not lesser than what it was before”.
As regards providing for a cap on GST rate in the Bill as demanded by Congress, Meghwal said the government has made it clear in various meetings with the Congress leaders that this provision is not practical and can not be made functional.
The Bill in its current form empowers the GST Council, tasked with implementation of the law, to decide as to how disputes arising out of its recommendations will be resolved.
The manufacturing base states want 1 per cent additional tax levy to make up for their losses in revenue. Experts welcomed the developments. The final wording will not leave any ambiguity, he said.
The meeting of Finance Ministers also agreed to include in the Constitutional Amendment Bill the mechanism of compensating States for any loss of revenue in first five years of GST subsuming all indirect tax, including VAT.
The States also unanimously shot down a proposal by the Centre for dual administrative control of small traders with an annual turnover of less than ₹1.5 crore.
Himachal Pradesh Excise and Taxation Minister Prakash Chaudhary said that the state is in favour of dual control.
He said discussions are underway to work out a revenue-neutral rate.
“Above Rs 1.5 crore a smooth consistent methodology has been worked out for both centre and state to be able to work together shoulder to shoulder with regard to revenue generation”, he said.
A panel headed by Chief Economic Adviser Arvind Subramanian had recommended a standard GST rate of 17-18 per cent around a revenue-neutral rate (RNR) of 15-15.5 per cent. There are three other rates – a lower rate of 12 per cent for some goods, 40 per cent for sin goods (luxury items, liquor) and 2-6 per cent for precious metals.
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The GST was to be originally implemented from April 1, 2016 but lack of consensus among states delayed it.
