Rajya Sabha panel backs majority of GST Bill proposals

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New Delhi,July 23:  The chances of the Constitution (122nd Amendment) Bill, meant to introduce the Goods and Services Tax (GST), clearing Parliament in the current session brightened, with the Rajya Sabha Select Committee endorsing almost all its provisions after the opposition created ruckus in both Houses of Parliament on Wednesday.

The committee headed Bhupender Yadav of the BJP said, the GST rate should not go beyond 20 per cent as standard rate and 14 per cent as reduced rate. It agreed with the demand of parties such as the Trinamool Congress for full compensation from the Centre for any revenue loss to the States during the transition.

It suggested that the provision in the Bill that the Centre may compensate the States for up to five years for any revenue loss be replaced with a commitment of compensation for five years.

The committee's report also contained dissent notes from the Congress, the AIADMK and the Left parties.

The Bill, which the Lok Sabha has already approved, will now have to be taken up for passage in the Rajya Sabha. As it is a Constitution amendment Bill, it will have to be approved by two-thirds of the members in the Upper House, where the ruling BJP does not enjoy a majority. The government will have to depend upon the support of regional parties and allies.

"Administratively, we are taking steps to ensure that both the Centre and the States will be able to meet the rollout target date of April 1, 2016. Efforts would be made to have a reasonable rate of GST so that the experience is a successful one for the whole country," Revenue Secretary Shaktikanta Das told mediapersons.

"We are hopeful that the Congress will reconsider its irresponsible stand on the GST . It is hardly a dissent note on the Bill; it is a dissent against the Congress's own proposals . Congress MPs are giving a dissent against the suggestions made by their own Chief Ministers," Union Finance Minister Arun Jaitley told presspersons after the report was tabled.

In its dissent note, the Congress demanded that a provision capping the GST rate at 18 per cent be added to the Bill to insulate consumers, especially the poor, from any "unfair burden".

The AIADMK's note said the GST Council, as a constitutional body, "impinged" on the legislative sovereignty of both Parliament and the State legislature and would jeopardise the autonomy of the States in fiscal matters.

Significantly, the committee rejected the Opposition's demand for lowering the Centre's say in the GST Council. It recommended that the representation in this decision-making body be retained at the proposed level of one-third of the total for the Centre and two-thirds for the States.

On the States' demand for the levy of one per cent additional tax over and above the GST on inter-State supply of goods, the committee recommended an amendment. As the proposed levy was likely to have a cascading effect on taxes, it should be on "all forms of supply made for a consideration," it said.

A committee, headed by Chief Economic Adviser Arvind Subramanian, has been deliberating on ways of reducing the cascading effects of the proposed additional levy.

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