The government has circulated official amendments to the GST bill to drop 1 per cent additional tax and include a definite provision in the statute for compensating states for revenue loss for 5 years as it gears up to discuss the long-pending bill in the Rajya Sabha tomorrow.
Under the modified provisions of GST Constitutional Amendment Bill circulated among the members today, GST Council will be required to establish a mechanism for adjudication of disputes, which could arise between the Centre and states or among states themselves.
The 2014 bill authorised GST Council to decide upon the modalities for resolution of disputes.
With these official amendments, the government has partially met the demands of the Congress party which has been blocking the bill in the Rajya Sabha. One of the three demands of the Congress was to do away with the 1 per cent additional manufacturing tax.
On the demand for a Supreme Court judge-headed panel for resolving GST disputes, the official amendments say that the GST Council will establish a mechanism for solving disputes.
With regard to the demand for putting a GST rate cap in the Constitution, the government has not mentioned anything in the official amendments.
Finance Minister Arun Jaitley, at a meeting with his state counterparts last week, promised to keep the incidence of tax low while safeguarding the revenue of the states.
Jaitley has been meeting leaders of Congress and other parties, including SP, BJD, TMC and RJD, to build a consensus on the passage of the long pending indirect tax reform bill in the Rajya Sabha. It was approved by the Lok Sabha in May 2015.