Congress wants tobacco, alcohol and electricity supply to be brought into the ambit of the tax.
Even as the long-pending Goods and Services Tax Bill is being examined by a parliamentary committee, the government categorically said on Friday that it would not reconsider withdrawing the 1 per cent additional tax, over the GST, to help manufacturing States, a provision strongly opposed by the Congress and likely to feature in its dissent note to the panel.
“The 1 per cent tax goes against the spirit of GST,” V.S. Krishnan, Member-Service Tax and GST, Central Board of Excise and Customs, acknowledged,while adding, “but the manufacturing States wanted some revenue comfort to offset the investments they have made.” Mr. Krishnan was speaking to journalists at a FICCI event on GST. He said the government was not rethinking the 1 per cent tax. It will still be levied for a period of two years, he clarified.
The parliamentary committee examining the draft GST Bill is expected to submit its final report to the Rajya Sabha by July 24, within three days of the commencement of the monsoon session.
Congress, Left to submit dissent notes on GST panel report
On July 20, the Congress — and in all likelihood, the Left Parties — will also submit dissent notes to some of the provisions introduced by the NDA government.
The Congress — that had originally sponsored a GST Bill when the UPA government was in power – remains in favour of the proposed indirect tax regime. But it is opposed to some provisions. Topping that list is giving the States the power to levy 1 per cent additional tax as it feels that if that provision is implemented, only states like Gujarat, Maharashtra and Tamil Nadu will benefit at the cost of other states.
Congress for ceiling
The Congress also wants a ceiling of 18 per cent on the GST tax rate and tobacco, alcohol and electricity supply to be brought into the ambit of the tax. The draft Bill has proposed compensation to states for five years for their revenue losses, but the principal opposition party wants a GST Compensation Fund to be set up under the supervision of the GST Council. The Congress is also pushing for the restoration of a dispute settlement mechanism provision that was in an earlier draft Bill (introduced when it was in power).
The GST bill has been passed by the Lok Sabha, but was referred to a Select Committee by the Rajya Sabha, where the ruling NDA government does not enjoy a majority. The Government aims to roll out GST from April 1, 2016.
Even though the Modi government has succeeded in getting parties like the Janata Dal (United) and the Trinamool Congress on board, it needs to tread with care as this is a Constitution Amendment Bill, requiring a two-thirds majority.
Sources also said the Congress wants a reduction in the Centre’s representation in the GST Council, which will oversee the implementation of the new tax regime. The party has suggested that the States’ representation be increased to three-fourth from the present two-third.