GST Bill passes Lok Sabha test

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Updated: May 06, 2015 5:59 PM

Getting Goods and Services Tax (GST) through the Rajya Sabha a litmus test for NDA.

Arun Jaitley gst billThe GST Bill can’t be passed in the Rajya Sabha without non-NDA parties supporting it as the NDA has only 63 members in the 244 member house. (In picture: Arun Jaitley)

With the Lok Sabha passing the goods and service tax (GST) Bill, the NDA government now is slated to face the real test, that is to get it passed in the Rajya Sabha, which is going to be difficult as it doesn’t have the required number for this in the upper house. The government though has resisted the opposition’s demand to send the Bill to the standing committee in the Lok Sabha and has got it passed by the lower house, the Congress party is pushing for the Bill to be referred to the RS select committee.

The Bill can’t be passed in the Rajya Sabha without non-NDA parties supporting it as the NDA has only 63 members in the 244-member House. This could mean a longer than expected legislative process as a Constitutional Amendment Bill needs ratification by two-third of members present in both Houses besides approval by 50% of the state assemblies. As parties like AIADMK and BJD along with the left parties are with the Congress, getting the Bill cleared in the Rajya Sabha in the current session appears tough.

Finance ministry officials, however, have pointed out that the GST Bill being a money bill—if the upper house returns it to Lok Sabha, which then passes it again and sends it back to the Rajya Sabha—it will have no other choice than to pass it.

That may be a possibility, but the government would do well by discussing some of the provisions of the Bill that could nullify the benefits of the GST even if it comes at the cost of a possible delay in the proposed implementation of GST from April 1, 2016.

Though it is unfortunate the way the opposition is trying to obstruct the passage of the GST Bill, a fundamental flaw with the Bill that needs to be fixed is the 1% additional tax that has been granted for a period of two years, to placate the ‘producing’ states.

An equally big problem is real estate being kept out of GST—this means there will be no input tax credit on items like cement and steel that are used in the construction sector.

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