Congress softening its stance on GST?

Ahead of a stormy Monsoon Session, the principal opposition Congress seems to be softening its stance on the Goods and Services Tax(GST) Bill.

The Congress, which has been critical of GST so far in its current form, has said that it is open to for a discussion on its toughest demand of a cap on the tax rate in the Constitutional Amendment Bill.

In a conversation with The Indian Express, Anand Sharma, deputy leader of Congress in the Rajya Sabha said that the party is waiting for a call from government’s side.

“We want an assurance from the government on ‘ring-fencing’ of the tax rate… Let the government come with options,” said Sharma. When asked to elaborate, he said, “Let them (the government) talk to us.”

Sharma denied the reports of any formal talks with the government on the issue.

“So far, the Narendra Modi government has not approached the Opposition parties for a discussion. It took the Prime Minister one-and-a-half years to meet all Opposition parties on February 16, 2016. There has been no meeting since then” he said.

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Congress had put three principal conditions for its support on GST bill, these include – 1. An 18 per cent capping on taxes, which is should also be mentioned in Constitutional Amendment Bill, 2. Formation of a GST Disputes Settlement Authority, which may be approved by the Government 3 Deletion of proposed one per cent additional tax that which favors producer states.

However, Finance Misniter Arun Jaitely have always denied making the changes in Constituional Amendment Bill, citing that this will require a constitutional amendment every time, even in a case of minor tax rate changes.

Congress may face a possible isolation this time over the issue in Parliament. Given the fact that all state FMs except Tamil Nadu, including those from Congress ruled states have passed GST, the party is not left with much to confront the government. Even the left ruled Kerala have stated in favor passing the GST.

In a recent meeting, the differences among the party top brass came out in open. Sources said that all the leaders didn’t share similar views on the issue.

Some leaders noted that the UPA government itself did not have such a provision in the Bill, sources told The Indian Express. Subsequently though, the Congress decided to press for a rate cap in the Constitutional Amendment Bill.

Some of the tax experts involved in the exercise figured out possible options government can put forth to negotiate with the Opposition. “Instead of putting a rate cap, the government can think of a cap on the indirect tax as a percentage of GDP. This is not so rigid. If the number goes above a certain percentage, the GST Council can recommend a review. The other more straightforward option can be to state that tax rates be set based after discussing these in the GST Council. The GST Council can strongly recommend the adoption of the lowest possible rate,” an outside expert, closely working with the government on the issue, told The Indian Express.