Govt scraps plan for special session on GST, rollout unlikely before 2017

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Finance minister Arun Jaitley said the Cabinet panel on parliamentary affairs had recommended to the President that the monsoon session of Parliament be prorogued.

NEW DELHI: Implementation of the Goods and Services Tax is unlikely before 2017 as the government on Wednesday abandoned plans to convene a special session of Parliament to approve the Constitution amendment bill for rolling out the country’s most ambitious indirect tax reform since independence.

Finance minister Arun Jaitley said the Cabinet panel on parliamentary affairs had recommended to the President that the monsoon session of Parliament be prorogued.

The government had hoped to convene a short special session to approve the GST bill and had kept the monsoon session alive. However, opposition parties, which had blocked Parliament proceedings demanding the resignations of foreign minister Sushma Swaraj and the chief ministers of Madhya Pradesh and Rajasthan, showed no signs of relenting.

Lack of support from the opposition ranks prompted the government to scrap plans for a special session of Parliament “for the time being”, Jaitley said, adding that the government would pursue efforts to thrash out an agreement over the GST bill.

“We will keep trying. We are in contact with all political parties. And nearly all parties except Congress are in favour of this bill. In Lok Sabha, except Congress, all political parties had voted in favour of the bill. Congress had walked out, they (other parties) had not walked out. If situation changes, then Cabinet will again reconsider the matter,” Jaitley said.

The winter session of Parliament is likely to be held in November but experts said it would be too late for adhering to the April 1, 2016 rollout date.

Asked whether the government will miss the deadline for rolling out GST by April 1, 2016, the finance minister said, “Your guess is as good as mine.”

The government was keen to ensure passage of the bill in the monsoon session but stiff opposition from the Congress held up proceedings. The government has argued that the amendment to the Constitution, which needs to be ratified by half the state legislatures, is critical to meet the April 2016 rollout deadline.

An amendment to the Constitution will be followed by the setting up of a GST Council, comprising the Union and state FMs, which will decide the details including a revenue-neutral tax rate. Then, the government will introduce a GST bill, which will enable actually levy of the tax.

The government had assured states that it would be a win-win situation as far as the Centre and states were concerned. Jaitley said the tax reform would help raise India’s GDP and increase revenues. States had also been assured of full compensation in case of revenue loss.

The bill on GST, which will be the biggest tax reform after 1947, was introduced in Lok Sabha in December last year. According to the bill, a single rate of GST will replace central excise, state VAT, entertainment tax, octroi, entry tax, luxury tax and purchase tax to ensure seamless transfer of goods and services.

GST has been in the works for over a decade and has missed several deadlines, thanks to political wrangling. The NDA government had identified it as a key reform and implementation of GST would have sent positive signals to investors about the coalition’s commitment to accelerating economic reforms.

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