Still no clear sign of breakthrough in political deadlock on rates
Finance minister Arun Jaitley is yet to name a chairman for the Empowered Group of State Finance Ministers (ECSFM) on the proposed national goods and services tax (GST), even two months after Kerala finance minister K M Mani stepped down.
This is despite the Union government also making fresh efforts to enable the tax’s rollout, including pushing for passage of constitutional amendment Bill in the Rajya Sabha session starting next month.
The Lok Sabha has already passed the Bill, stalled in the other House for want of majority support. After the passage, a Bill of the GST itself would come before Parliament and all state legislatures. Then, rules will be framed. The absence of a ECSFM chairman has derailed its meetings, needed to discuss key issues on the proposed laws and rules.
“There has been no communication from the finance minister. He has probably been keeping busy on account of budget preparations. We are still waiting,” said a member.
After Mani resigned as finance minister of Kerala over corruption charges in November, only one meeting of the committee has taken place. In November, Delhi finance minister Manish Sisodia was selected to chair a meeting for a day. It had decided on a sub-panel to decide on the issue of a threshold, as states were divided on whether GST should kick in from Rs 10 lakh or Rs 25 lakh of annual turnover.
The next round was to take place in December but did not happen. The committee was to draft a GST law and business processes for payments, refunds and returns filing.
The constitution amendment Bill could not be cleared in the previous session of Parliament, too. The Congress party stood stern on its demand to fix the proposed rates in the legislation itself. The Centre has staunchly opposed this, saying this would limit flexibility of the proposed GST Council to change these.
In between, a committee headed by the government’s chief economic advisor, Arvind Subramanian, recommended a standard GST rate of 17-18 per cent, with a lower rate of 12 per cent for certain commodities and a ‘sin tax’ of 40 per cent for items like aerated drinks and tobacco.
In the proposed GST Council, the Centre is to have a third of the members and states together the other two-third. The consensus so far is that a decision requires a three-fourth majority.
There were some signs of the Congress diluting its position over fixing the GST rate in the constitution amendment Bill. At the World Economic Forum in Davos, party leader Kamal Nath had said, “I hope they (the government) do say that I accept the cap but let’s not have it in the constitution.”
Jaitley had noted the GST was originally a Congress initiative. By insisting on inclusion of GST rates in the constitution amendment bill, it is demanding something it hadn’t proposed when the party was in power.
GST was originally proposed to be implemented from April 2010. Several deadlines were missed due to differences between Centre and states. The current deadline is April 2016, also set to be missed.