GST Bill: Government slashes additional tax, refuses GST rate cap; Will Congress give in?

While the Congress has long being stalling the passage of the much-awaited Bill, Modi government also stands firm on some of the former's key demands.

Published: July 28, 2016 5:51 PM IST

By India.com News Desk

GST Bill: Government slashes additional tax, refuses GST rate cap; Will Congress give in?

July 28: The Narendra Modi government is hoping to pass the Goods and Services Tax (GST) Bill in the ongoing monsoon session. The intention of the government to ensure that the Bill is passed in the near future is indicated in its move of acceding to some of the demands raised by the Opposition Congress. Meanwhile, Finance Minister Arun Jailtey on Thursday also held a meeting with SP, TMC, BJD and Left parties, in order to get all parties on board for the Bill.

However, while the Congress has long being stalling the passage of the much-awaited Bill, Modi government also stands firm on some of the former’s key demands. Today, the government is likely to offer a draft of the changes to the Constitutional Amendment Bill to senior Congress leaders. ALSO READ: Cabinet drops 1 per cent additional tax from GST Bill

Here are all the latest developments of the Bill:

  • In a Cabinet meeting on Wednesday, the government slashed the extra one per cent levy that was to be imposed at the behest of the manufacturing states. The tax was insisted upon by the states, to cover the additional costs borne by them in order to improve their manufacturing capabilities.
  • To make up for those additional costs and to allay the fear of the manufacturing states, the Centre has instead proposed full compensation for first five years of the implementation of GST, to cover any revenue losses that these states might suffer. This came after State Finance Ministers on Tuesday had made concerted demands to change the wording of the Bill to guarantee full compensation.
  • Modi government has decided to not go along with Congress’s demand to put a cap on the GST rate at 18 per cent and to incorporate the provision in the Bill itself. This was Congress’s key demand and has proved to be a constant thorn in the Centre’s side. The cap is instead, likely to be a part of GST Bill that will be legislated separately by both the Centre and states.
  • Another demand of the Congress pertained to provisions relating to dispute resolution. The Opposition party wants ‘stronger’ wording in Article 279A (11) of the Bill, which lays down the mechanisms adopted by the Goods and Services Tax Council for resolution these disputes. This issue was also discussed by the Cabinet.
  • Jaitley is likely to hold meeting separately with leaders of Congress and other parties, including the Left, before the Bill is discussed for passing in the Upper House. Once the Bill is cleared in the Rajya Sabha, the amended Bill will be tables again in the Lok Sabha for discussion.

The government needs two-thirds majority in the Upper House to pass the Bill. Out of the 245 seats in Rajya Sabha, 60 seats are occupied by the Congress, while Bharatiya Janata Party (BJP) occupies 53 seats. For the Bill to pass, approx 163 positive votes are needed. While the government might be hinting that most parties are on board to pass the Bill as soon as possible, it still needs to build a consensus in the Upper House and for that it needs to move fast.

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