Arun Jaitley has, however, consistently maintained that nowhere in the world are tax rates put in the Constitution and the government needs to have flexibility.
NEW DELHI: As the Congress showed signs of softening its stand on the Goods and Services Tax (GST) if the tax rate is “ring-fenced”, a top government functionary on Saturday said it is a “sensible suggestion” and talks will continue with the opposition party. The Congress, which originally mooted the GST in 2009 to replace all indirect taxes, has been demanding that the overall tax rate be capped at 18%.
It also wanted to scrap a proposed additional 1% tax designed to compensate manufacturing states that fear losing out on revenue. Anand Sharma, senior Congress leader, is reported to have said that his party is open to discussing its demand for including the tax rate in the Constitutional Amendment Bill if the government were to come out with a suggestion to ring-fence the tax rate. Since November last year, the Congress has been insisting that a specified GST rate of 18 % should be capped in the Constitutional Amendment Bill, the 1% additional tax abolished and a GST Disputes Settlement Authority formed to settle state disputes.
Finance Minister Arun Jaitley has, however, consistently maintained that nowhere in the world are tax rates put in the Constitution and the government needs to have flexibility to change the rates in case of contingencies like natural calamities. The government is keen to get the GST Bill cleared in the upcoming monsoon session of Parliament.
Jaitley is also said to be open to talking to the senior leadership of the Congress before the session begins. The government is banking on support from smaller regional parties to pass the national sales tax legislation in the Upper House of Parliament and then get supporting laws enacted by the year-end so that GST is introduced from April 2017.
The GST Bill, which intends to convert 29 states into a single market, was earlier planned to be introduced from April 1 this year, but the deadline was missed as the bill to remains in a limbo in the Opposition-dominated Rajya Sabha.