The RS panel said it would be wise to keep the GST compensation fund out of the purview of the bill because it is a temporary component for five years.
NEW DELHI: Government’s efforts to get the GST bill approved by Parliament got a boost on Wednesday with several groups signaling support but the Congress party could still block the passage of the crucial legislation which is seen as a test case of the NDA’s reform agenda.
The 21-member Rajya Sabha committee on the GST bill submitted its recommendations on Wednesday with the Congress, Left and AIADMK giving their dissent notes. But Finance Minister Arun Jaitley said the government will press ahead with the GST bill and evolve a consensus on the legislation including Congress.
“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,” Jaitley told reporters.
The RS panel said it would be wise to keep the GST compensation fund out of the purview of the bill because it is a temporary component for five years. It also said it would be judicious not to have a separate and distinct authority for dispute settlement apart from the GST council. It also said that banking services may be kept outside GST. “Furthermore, if this is not possible then, interest, trading in securities and foreign currency and services to retail customers should not be liable to GST….” the report said.
The panel was of the view that if the GST rate is more than the service tax rate of 14%, the increase in the tax rate will further increase the cost of banking services. “This results into cost of doing business to be much higher in India as compared to other competing countries. Therefore, the committee recommends that to be internationally competitive, the GST rate for banking industry should be minimum,” the report said.
The committee also backed the idea that alcohol and tobacco be kept out of GST net. Congress has demanded that alcohol be included in the tax. Jaitley said this was against the views of Congress CMs.
The panel said the non-government shareholding in the GST network was dominated by private banks and strongly recommended that the government should take immediate steps to ensure non government financial institution shareholding be limited to public sector banks or public sector financial institutions.
“Firstly, public sector banks have more than 70% share in total credit lending in the country. Second, GSTN’s work is of strategic importance to the country and the firm would be a repository of a lot of sensitive data on business entities across the country,” the report said.
In its dissent note, Congress proposed a ceiling of 18% GST rate which, it said, was reasonable, moderate and adequately revenue generating GST rate.
“I hope that the Congress party will reconsider its irresponsible decision,” Jaitley said referring to the Congress party’s dissent note saying it was against the suggestions given by its own Chief Ministers and state governments. He said the Congress party was against the country’s progress.
Jaitley was confident of getting the legislation approved. “I am hopeful and therefore, we are going to go ahead with the GST legislation. We will still try and build consensus and explain the rationale and reasoning as far as Congress is concerned.”