The Congress, sources said, may give a dissenting note on the additional tax as well as keeping petroleum products out of the GST regime in the present Bill.
Looking into the landmark GST legislation, the Rajya Sabha’s select panel may endorse a majority of existing clauses in this long-pending Bill, except for the provisions about compensation to states and the composition of GST Council with a diluted Central role.
Sources said the Congress at Friday’s meeting of the Select Committee pushed for a “pure GST” with states not being given powers to impose one per cent additional tax over and above the GST rate. The main Opposition party got “some support” on its stand about the role of states in the GST Council and the compensation to them, sources added. While none of the Panel members agreed to comment on record about the discussions, sources said 12 out of 21 members of the select committee favoured lowering the Centre’s representation in the GST Council to one-fourth, from one-third provided in the Bill, which has been approved by the Lok Sabha and is pending with the Rajya Sabha.
Another proposal supported by “some members” was to replace the word “may” with “shall” with regard to the payment of compensation that the Centre can give to states for loss of revenue on introduction of the single-rate Goods and Service Tax regime, sources said. The government got support of its allies as well as some opposition parties like the TMC and the BSP on all other clauses including allowing the states to impose one per cent additional tax over and above the GST rate.
The Congress, sources said, may give a dissenting note on the additional tax as well as keeping petroleum products out of the GST regime in the present Bill. The Committee, which is vetting the constitutional amendment Bill, will meet again on July 17 and 20, by when a draft could be ready. The panel, headed by Bhupender Yadav, has so far not decided when it will present the report to the Rajya Sabha, which opens on July 21 for the monsoon session, sources said.
The proposed GST Council will have Union Finance Minister as its Chairman and comprise two-thirds of members from states and one-third from the Centre. The Council will oversee the implementation of the GST regime that will subsume all indirect taxes. It will also decide on the GST rate. As per the GST structure, 100 per cent compensation would be provided by the Centre to states for first three years, 75 per cent for fourth year and 50 per cent for the fifth year.
In order to address concerns of the manufacturing states, the GST Constitutional Amendment Bill has provided for an additional one per cent tax for a period of two years. Since it is a constitutional amendment Bill, it will also require ratification by half of the 29 states after it is approved by Parliament. The government is racing against time to meet the April 2016 deadline to roll out GST.