Cabinet clears GST Bill, all eyes on Rajya Sabha now
The
Cabinet, headed by Prime Minister Narendra Modi, decided to include in
the Constitutional Amendment Bill that any dispute between states and
the Centre will be adjudicated by the GST Council, which will have
representation from both the Centre and states.
The Cabinet on
Wednesday cleared changes in the GST Constitutional Amendment Bill,
dropping 1 per cent manufacturing tax and providing guarantee to
compensate states for any revenue loss in the first five years of
rollout of the proposed indirect tax regime.
The Cabinet, headed
by Prime Minister Narendra Modi, decided to include in the
Constitutional Amendment Bill that any dispute between states and the
Centre will be adjudicated by the GST Council, which will have
representation from both the Centre and states.
With states on
board and the Cabinet approving the amendments, the government is
hopeful of passage of the long-pending Goods and Services Tax (GST) Bill
in the ongoing monsoon session of Parliament, which ends on August 12.
The GST Bill, with the changes approved by the Cabinet, could come up
in the Rajya Sabha as early as this week, but certainly by next week.
The
changes approved by the Cabinet are to the Constitutional Amendment
Bill that was approved by the Lok Sabha in August last year. Once the
Rajya Sabha approves the legislation, the amended Bill will have to go
back to the Lok Sabha again for approval.
"The amendments to the
GST Constitutional Amendment Bill have been cleared," a top official
said after the meeting of the Union Cabinet chaired by Modi.
The
amendments were taken up by the Cabinet after Finance Minister Arun
Jaitley's assurance to state finance ministers to include in the Bill
the mechanism of compensating states for all the loss of revenue for
five years.
The Bill, in its present form, provides that the Centre
will give 100 per cent compensation to states for first three years, 75
per cent and 50 per cent for the next two years.
However, the
Select Committee of the Rajya Sabha had in its report recommended 100
per cent compensation for probable loss of revenue for five years.
As
per the amendments, the Centre will now constitutionally guarantee
states any loss of revenue from the GST subsuming all indirect taxes,
including VAT, in the first five years of introduction.
By doing
away with the 1 per cent inter-state tax over and above the GST rate,
the government has met one of the three key demands over which
Opposition Congress has been blocking the Bill in the Upper House.
The
other demands of including GST rate in the statute and a Supreme Court
judge-headed dispute resolution body has not been accepted. It remains
to be seen if meeting of its demands halfway will persuade the Congress
to support the legislation.
There is a talk of mentioning the GST
rate in one of the two supporting legislations that need to be passed
after the Constitution is amended, a move that may pacify the Congress.
