The parliamentary panel is expected to submit its report in first week of monsoon session slated to begin in JulyThe National Democratic Alliance (NDA) wants to pass the bill in the early part of Parliament’s monsoon session so that it can roll out the GST on 1 April 2016.
New Delhi: The Parliament select committee formed to study the constitutional amendment bill for a nationwide goods and services tax (GST) is expected to hold its first meeting on 22 May.
It was formed on 12 May, following a strident demand by opposition parties that command a majority in Rajya Sabha. The bill has already been passed by Lok Sabha, where the government is in majority.
The National Democratic Alliance (NDA) wants to pass the bill in the early part of Parliament’s monsoon session so that it can roll out the GST on 1 April 2016. The select committee is expected to submit its report on the last day of the first week of the monsoon session, which is likely to begin in July.
“The meeting has been called to discuss how to consult with various stakeholders, which will include bureaucrats, state governments and their representatives and various non-governmental organizations (NGOs),” said three people familiar with the development.
The panel may also talk to industry bodies, which are likely to oppose the changes made to the bill to get states on board.
The NDA has only 62 seats in the Rajya Sabha as against 162 required for a two-third majority to pass the bill. The government hopes to secure the opposition’s support by accommodating their views through the select committee.
After both houses of Parliament pass the bill, at least half of India’s 29 states must ratify it, before sending it for the president’s assent. Following this, the centre will set up a GST council. Later, the centre and the states will have to pass separate bills so that the new tax regime takes effect.
The GST aims to unify various central and state taxes, including the excise duty, service tax and value-added tax (VAT) to create a common market.
The government introduced the bill in Lok Sabha in December 2014, after claiming it had achieved broad consensus with the states.
The centre has promised to compensate states for five years to allay concerns that they may lose revenue once the GST is rolled out. It has also inserted a provision to allow manufacturing states to levy an additional 1% tax on supply of goods for two years.
For now, GST will not apply to petroleum products.
However, companies worry that these measures will distort the GST structure and make it impossible for them to claim input tax credit. Industry lobby groups are expected to raise this issue with the committee, seeing it as their last chance to correct what they perceive to be distortions.
“To be sure, a broad political consensus still exists on the GST (between the centre and states, ruling and opposition parties), thus while there could be intermittent delays/operational setbacks (select committee on the GST will submit its report in the first week of the monsoon session), we believe that tax reforms will continue as planned,” Citi India economist Anurag Jha said in a research note on 20 May.
“The government aims to roll out GST on 1 April 2016, which is a challenge considering the extent of legislative processes involved. So, while the timeline is challenging, it is still achievable if the Upper House clears the GST early in the monsoon session (July),” the note said.