Rolling out the ambitious Goods and Services Tax (GST) regime is “certainly” doable in 2016, Finance Minister Arun Jaitley said today, adding that he is in “continuous touch” with the Congress party in a bid to persuade them to cooperate.
“I hope that in the next session (of Parliament), the GST will make headway,” he said.
“After all, it was a Bill brought by them (Congress). For political reasons, they have done a volte-face but they should not be doing it indefinitely,” Jaitley told PTI in an interview.
“I am in continuous touch with them and I intend continuing that. It is part of my job to continue to persuade them,” he added.
GST, which seeks to simplify and harmonise the indirect tax regime across the country with a single uniform rate, has been stuck for many years in a political gridlock.
While the previous UPA regime failed to get it passed in Parliament due to opposition from the BJP and some other parties, Congress has now refused to support the bill proposed by the NDA government in its present form.
Asked about the government’s target to roll out GST from April 1, 2016, Jaitley said it was not like income tax and therefore it was not necessary to bring it in force from the beginning of a new financial year.
“GST is not an income tax (measure) and it does not have to come on only on first April of every year. It is a transactional tax and so it can come even in the middle of the year,” he said.
Jaitley said the passage of GST remains one of his key priority areas for the New Year, along with rationalising the direct taxes and further easing of process for doing business.
“I had hoped that we complete the process for GST this year. But it was plain and simple obstructionism of the Congress party which has prevented that.
“In fact, a national party adopting a disruptionist role and getting a sadistic pleasure in stalling a reform which could add to India’s GDP is a disappointment,” he said.
To a specific query on whether the GST was doable in 2016, he said, “It certainly is”.
The GST is expected to broaden the tax base and result in better tax compliance with a robust IT infrastructure.
The government also hopes it will herald a seamless transfer of input tax credit from one state to another, while an in-built mechanism has been envisaged to incentivise tax compliance by traders.
The Finance Minister said the Congress did not have “numbers to obstruct, so it used disruption in order to obstruct and I think it is a very bad precedent for India’s Parliamentary democracy if this is followed in state legislatures and if this is followed by future opposition parties, I think it would be a bad trend to set”.
“So, I do hope that the Congress party introspects whether such tactics can be indefinitely be followed in a Parliamentary democracy,” he said.
Jaitley further said the Parliament itself would have to find alternative methods of approving legislation if the Congress party does not change its tactics.
Asked about such alternatives, he said, “I hope it does not come to a stage where all legislations are passed in a din or you rely on money legislations, you rely more on executive decision making”.
“The fundamental question is how does India legislate? Fortunately, most of the legislations I have been able to get through, some even without discussion. But that is not the ideal way how laws should be passed”.
On his comments about the role of Rajya Sabha, Jaitley said, “I have frankly not argued for a fresh look at Rajya Sabha. Rajya Sabha is essential and part of India’s basic structure. The structure of Rajya Sabha cannot be altered.”
“I have never for a moment suggested that nor will I suggest that,” he asserted, while adding he was only talking about “the impact on Parliamentary democracy if the indirectly elected house continues to veto a directly elected house”.
Giving illustrations, Jaitley said, “Standing Committees of both houses of Parliament, Joint Standing Committees, approve unanimously a legislation. The Rajya Sabha vetoes it and appoints its Select Committee which means they are questioning the very credibility of the Standing Committee system which for over two decades has served us well.
“Therefore, this time we have had to go for a Joint Committee instead of the Standing Committee to avoid this kind of situation.
“Two, Rajya Sabha as a house which is supposed to maintain a check and balance, can once in a while disagree with a legislation passed by the Lok Sabha. It can be referred to a joint session, but every other law they cannot disagree with. It cannot happen too frequently.
“And if the indirectly elected house, for political and collateral reasons, vetoes a directly elected house, it does not augur well,” he said.
Talking about the system in other countries, Jaitley said, “In Britain, they follow a pattern that the Upper House can send it (a bill) back once for reconsideration to the Lower House and if the Lower House, which works on a mandate and which has been elected on a manifesto, second time approves it, the Upper House always accepts it.”
Asked whether that can be followed in India too, he said, “That could be accepted as a possible precedent.”