GST moved in LS amid stiff Opposition resistance

Mangalore Today News Network

New Delhi, Apr 24 2015: The long-pending Goods and Services Tax (GST) Bill was on Friday moved in the Lok Sabha for consideration amid stiff resistance by several Opposition parties, even as Finance Minister Arun Jaitley said it is a “win-win” measure and states have nothing to fear.

Members of Congress, led by Sonia Gandhi, along with those of TMC, Left and NCP staged a walk out after their plea for referring the Constitution Amendment Bill to the Standing Committee was not accepted. AIADMK and BJD also opposed its consideration but did not walk out.

The Opposition members, which alleged that the government was “bull-dozing” and bringing the bill in “hush hush” manner, wanted more time to study the “new” legislation and meanwhile finish the financial business.

Mr. Jaitley assured all cooperation from government to complete the business of demands for grants of various ministries before Guillotine is applied on April 28.

After hour-long wrangling over the procedures between the ruling and the opposition sides, the Bill was taken up when Speaker Sumitra Mahajan ruled that it is an important legislation on which the Finance Minister can make introductory comments and a discussion can be taken up at a later date.

Commending the Bill for consideration and passage, Mr. Jaitley said: “GST is going to lead to a win-win situation as far as the centre and the states are concerned. It is going to up India’s GDP. It is going to up India’s revenue and therefore I commend GST Constitution Amendment Bill to the House for (consideration)“.

Seeking to assuage fears of states that they will loss out on revenues once GST is implemented, he said the Centre and the States will have concurrent power to levy tax on goods and services.

Stating that when Value Added Tax (VAT) was introduced, states demanded compensation for more than five years.

However, not a single state asked for compensation on the sixth year.

“Therefore, please do not have this fear (of revenue loss on account of GST implementation),” he said, adding, besides, ease of doing business, GST will help “trade to grow and taxation of states will not be lost in any manner”.

Earlier, Mr. Jaitley moved the bill on GST regime for the country that will subsume all central and state levies and create a single market.

The Constitution (122nd Amendment) Bill, 2014, was placed before the Lok Sabha, the lower house of parliament for consideration and passage, even as the opposition demanded that it be sent to the relevant standing committee since some of its provisions had undergone a change.

But Mr. Jaitley took the stand that he had already introduced it in Lok Sabha on Dec 19, 2014 and suggested that the house take it up for discussion and its eventual passage. “No one has the monopoly to prevent India’s progress,” the finance minister said.

The discussion is slated for next week.

The government has targeted the new regime to come into force from the next fiscal. Mr. Jaitley told the house that in his limited intervention that the new regime will remove certain anomalies in the existing indirect tax that were imposing a tan on tax already collected.

He said it was a win-win situation for both the states and the centre. As an example he said: “At the moment, the states do not get any shares of service tax. It entirely goes to the centre. But under the new regime, states will also get a share of services tax.”

Mr. Jaitley also said every decision in terms of levies under the goods and services tax will have to be ratified by 70 percent majority of a new council proposed in the amended bill, adding this will prove to be a much-desired example of cooperative federalism.

For the Constitution to be amended, it needs two-thirds majority in both houses of parliament and then its ratification by at least 15 state legislatures. It will then to the president for his final signatures.

Once this far-reaching amendment is carried out, India will have a new goods and services tax regime that will fo away with central indirect taxes such as excise duty, countervailing duty, and service tax, as also state levies such as value added tax, octroi, and luxury tax.

The tax, thus, collected will be divided between the central government and states on the basis of formulae approved by Parliament, based on the recommendations of a Goods and Services Tax Council to be set up under the new statute.

The union cabinet, led by Prime Minister Narendra Modi, had last month approved the payment of compensation to states for the loss they would incur on account of a reduction in the central sales tax from 4 percent to 2 percent for three years from fiscal 2010-11.

Finance ministry sources said preliminary estimates indicate that Rs.33,000-crore could be the amount payable to states and union territories for the entire period, and settling these claims will help create an enabling environment for rollout of the new regime.

 

Courtesy: The hindu