Wednesday date for GST as Congress finally yields

Published: 02nd August 2016 04:27 AM  |   Last Updated: 02nd August 2016 04:27 AM   |  A+A-

NEW DELHI: All things being equal, the much-negotiated Goods and Services Tax—the 122nd Constitutional Amendment Bill—requiring two-thirds majority, will be taken for enactment in the Rajya Sabha on Wednesday.

The Government and the Congress reached an agreement on Monday, with both conceding a little ground, within the limits set by the State Governments.

Though one more meeting is scheduled to take place, there appears to be a broad convergence of political will to pass the long-pending bill, clearing the deck for a uniform tax regime across the country.

The government has conceded two of the three demands put forth by the Congress. The Cabinet has agreed to remove the provision for 1 per cent additional cess on manufacturing states. It has also agreed to an independent GST dispute resolution mechanism, though not in the exact form as demanded by the Congress.

On the third issue of 18 per cent cap on the GST, the Congress has conceded ground. It’s no longer demanding that the cap be made a part of the Bill. The Congress is also willing to allow the GST Council, made up of state governments, to decide on the cap figure. 

The Government and Congress reached an agreement on the GST Bill on Monday, with both parties conceding a little ground, within the limits set by States.

According to the agreement arrived, the constitutional amendment bill will mandate the GST Council to set up the independent dispute resolution body, thereby pushing the ball to the States’ court.

The text and wording is still being worked out. Congress deputy leader in Rajya Sabha, one of the negotiators talking to the Government, quipped: “Now, it all depends on a ‘shall’”. Whether the GST Council ‘shall’’ set the independent body, as the opposition would like it to, or it will set up, at some time. In quasi-legal terms, “shall’’ in an amendment bill would bind the GST Council on the issue, whereas “will’’ may leave it a bit open ended.

The Parliamentary Affairs Minister Ananth Kumar indicated that there could be slabs, with an outside limit of taxation for luxury goods and services.

The Congress had to concede on 18 per cent cap, after the State Governments including its allies, like Bihar Chief Minister Nitish Kumar refused to be hemmed in by the 18 per cent ceiling.

The LDF Government of Kerala has in fact demanded that ceiling be as high as 24 per cent. The Finance Minister Arun Jaitley said that once the Constitutional Amendment bill is through in the Monsoon session of Parliament, by winter session the State Finance Ministers   would be meeting to arrive at a mutually agreeable cap. By the winter session, the treasury hopes to bring the enabling legislation-the CGST (Central-GST) and IGST (Interstate-GST).

No less than 50 per cent of the State Assemblies will have to thereafter pass the State-GST bill, for the tax reform to kick in. Whether the cap would be made part of a legal framework as demanded by the Congress in the CGST or left to the States, will have to be seen. The negotiations won’t be over by Wednesday.

But the biggest hurdle, the constitutional amendment is about to be crossed. The Government would have liked to take it up on Tuesday itself. But the absence of the Leader of Opposition, Rajya Sabha, Ghulam Nabi Azad and the fact that the bill is yet to be circulated  among members, became reasons for the Wednesday schedule.

Minister Ananth Kumar agreed it would be taken up on Wednesday when both Azad and Congress president Sonia Gandhi would be back from Varanasi-after wrapping up the second big road-show of the party in poll-bound UP.

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