A Parliamentary Committee, which scrutinised the crucial Goods and Services Tax (GST) Bill, has prepared a draft report wherein the government has agreed to provide compensation to states for any revenue loss for five years, thus giving in to one of the major demands from several opposition parties.
The report will be considered by the Select Committee of Rajya Sabha tomorrow when it is expected to be adopted for presentation in Parliament which convenes on Tuesday.
According to sources, the government will move an official amendment to the Goods and Services Tax (GST) Bill, a Constitution amendment legislation that is aimed at overhauling the tax structure in the country.
The amendment relates to Clause 19 of the Bill, amended version of which now reads as: “Parliament may, by law, on recommendation of the GST Council, provide for compensation to the states for loss of revenue arising on account of implementation of GST for a period of five years,” a source told PTI.
The earlier version said the compensation would be paid for “up to five years”, the source said.
The opposition parties also wanted that the word ‘may’ be changed to ‘shall’ in the said clause. However, the government argued that as per the Constitution, both words mean the same thing.
The panel completed the consultation process on Friday last when clause-by-clause discussion took place on the bill.
As per the schedule, the report is to be submitted to Rajya Sabha by July 24, three days after the commencement of the Monsoon Session of Parliament.
Congress is preparing a dissent note which would say that it cannot support a bill which is not “simple and comprehensive”.
While Congress is in favour of the proposed indirect tax regime, it wants a ceiling of 18 per cent on the GST tax rate.
It is also against granting of power to states to levy 1 per cent additional tax as it would have a cascading effect and cause market disruptions.
Sources also said Congress wants the Centre’s representation in the GST Council, which will oversee the implementation of the new tax regime, to be reduced to one-fourth from the current proposal of one-third. It, however, did not get support from most of the other parties.
The GST Bill has been passed by Lok Sabha and was referred to the Select Committee by Rajya Sabha, where the ruling NDA government does not enjoy majority. The government aims to roll out GST from April 1 next year.