The government on Tuesday tabled the Constitution (122nd Amendment) Bill for rolling out the goods and services tax (GST) in the Rajya Sabha with a few changes recommended by a select panel of MPs but protests from the Congress forced the adjournment of the House without any discussion till Wednesday. With just two more days remaining in the monsoon session of Parliament, the Modi government is hoping against hope for support from all non-Congress parties in the Opposition such as the Trinamool Congress, SP, BSP, JD(U) and CPI(M) to get just enough support to get the Bill passed with a two-thirds majority.
The revised Bill does not have major changes from the version passed by the Lok Sabha in May including on the accepted recommendations of the Rajya Sabha select panel as these could form part of the central and state GST laws and rules to be framed subsequently. The revised Bill speaks about the Centre compensating states for five years for revenue loss on account of GST implementation but does not specify “full” compensation as demanded by states. Also, it does not clarify that the 1% origin-based tax on interstate trade shall be restricted to only supplies made against a consideration.
The understanding is that this measure aimed at reducing the cascading effect of the origin-based tax could be part of the GST legislation.
To get the amendments to the Constitution passed, the Bill needs 164 votes in favour assuming all members are present and voting. Since the BJP is in a minority in the 245-member Rajya Sabha with only 63 seats along with its allies, and the Congress has 69 members, the ruling coalition requires the support of 101 of the 113 non-Congress, non-NDA parliamentarians, assuming the AIADMK, which also gave a dissent note to many provisions in the Bill, would lend is support.
Once passed in the Rajya Sabha, the Bill needs to be ratified by more than half of the 29 states.
Kerala finance minister and chairman of the empowered committee of state finance ministers KM Mani, who met Union finance minister Arun Jaitley before the Bill’s introduction, urged all political party to cooperate and support the Bill’s passage. “I am hopeful that the Bill would be passed in the current session. Otherwise, there is the winter session. Considering its significance, everyone should support its passage in the current session itself,” said Mani.
Jaitley, who moved the Bill amid slogan-shouting by Congress members seeking external affairs minister Sushma Swaraj’s resignation for alleged proximity to tainted cricket administrator Lalit Modi, accused the main opposition party of trying to halt the country’s progress by blocking the tax reform. According to experts, GST has the potential to add another 1.5% to the country’s economic growth rate. Jaitley said the Congress was using Lalit Modi issue as a “pretext” to stall the important tax legislation.
R Muralidharan, senior director, Deloitte India, said that for the GST regime to succeed on the ground, it is necessary for the government to not only give adequate advance notice to trade and industry but also to immediately start consultation on finalising the GST rates, laws and rules.