GST Bill moved in LS amid stiff opposition


The GST Council will consist of the Union Finance Minister (as Chairman), the Union Minister of State in charge of revenue or Finance, and the Minister in charge of Finance or Taxation or any other, nominated by each State government.

——————————————————————————————————————————————————Opposition demanded that the bill be sent to the relevant standing committee since some of its provisions had undergone a change.

The long-pending Goods and Services Tax (GST) Bill was on Friday moved in the Lok Sabha for consideration amid stiff resistance from several Opposition parties, even as Finance Minister Arun Jaitley said it was a “win-win” measure and the States have nothing to fear.

Congress members, led by Sonia Gandhi, and those of the TMC, Left and NCP staged a walkout after their plea for referring the Constitution Amendment Bill to the Standing Committee was not accepted. The AIADMK and the BJD also opposed its consideration, but did not walk out.

The Opposition, which alleged that the government was “bulldozing” and bringing the bill in a “hush hush” manner, wanted more time to study the “new” legislation and meanwhile finish the financial business.

Mr. Jaitley promised all cooperation from the government to complete the business of demands for grants of various ministries before Guillotine is applied on April 28.

After hour-long wrangling over the procedures between the ruling and the Opposition sides, the Bill was taken up.

Speaker Sumitra Mahajan ruled that it was an important legislation on which the Finance Minister could make introductory comments and a discussion taken up at a later date.

Mr. Jaitley said: “GST is going to lead to a win-win situation as far as the Centre and the States are concerned. It is going to up India’s GDP. It is going to up India’s revenue and therefore I commend GST Constitution Amendment Bill to the House for [consideration]“.

Seeking to assuage the fears of the States that they will loss out on revenues once GST is implemented, he said the Centre and the States would have concurrent power to levy tax on goods and services.

When Value Added Tax (VAT) was introduced, the States demanded compensation for more than five years. However, not a single State asked for compensation on the sixth year. “Therefore, please do not have this fear [of revenue loss on account of GST implementation],” he said. Besides, ease of doing business, GST would help “trade to grow and taxation of states will not be lost in any manner.”

The bill on GST regime for the country moved by Mr. Jaitley will subsume all Central and State levies and create a single market.

The Opposition wanted the Constitution (122nd Amendment) Bill, 2014 sent to the standing committee as some of its provisions had undergone changes.

But Mr. Jaitley took the stand that he had introduced it in the Lok Sabha on Dec 19, 2014 and suggested that the House take it up for discussion and its eventual passage. “No one has the monopoly to prevent India’s progress,” he said.

The discussion is slated for next week.

The government has targeted the new regime to come into force from the next fiscal.

Mr. Jaitley told the House that the new regime would remove certain anomalies in the existing indirect tax that were imposing a tax on the tax already collected.

He said, “At the moment, the States do not get any shares of the service tax. It entirely goes to the Centre. But under the new regime, the States will also get a share of the tax.”

Every decision in terms of the levies under the GST WOULD have to be ratified by 70 per cent majority of a new council proposed in the amended Bill. This would prove to be a much-desired example of cooperative federalism.

For the Constitution to be amended, the government needs two-thirds majority in both Houses of Parliament and then its ratification should be by at least 15 State legislatures. It will then be sent to the President for his final signatures.

Once the far-reaching amendment is carried out, the country will have a new tax regime that will do away with central indirect taxes such as excise duty, countervailing duty, and service tax, as also State levies such as value added tax, octroi and luxury tax.

The tax thus collected will be divided between the Centre and the States on the basis of formulae approved by Parliament, based on the recommendations of the GST Council to be set up under the new statute.

The Cabinet, led by Prime Minister Narendra Modi, last month approved the payment of compensation to the States for the loss they would incur on account of a reduction in the Central Sales Tax from 4 per cent to 2 per cent for three years from fiscal 2010-11.

Finance Ministry sources said preliminary estimates indicatedthat Rs.33,000-crore could be the amount payable to the States and Union Territories for the entire period, and settling these claims would help create an enabling environment for the rollout of the new regime.

Source: The Hindu

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