Difficult to accept demand for an exact GST rate Jaitley

Today, every state government, including all the Congress ones, is in favour of the Goods and Services Tax. You have every political party in Parliament which has said they will vote in favour. ARUN JAITLEY, Union finance minister

The government remained hopeful on Thursday about the prospects of a nationwide Goods and Services Tax (GST), but maintained its unwillingness to specify the tax rate in the proposed law, arguing that it could distort the system.

Once adopted, the GST can dramatically alter India’s indirect tax system by replacing a string of central and state levies such as excise, value added tax and octroi into a single unified levy and stitch together a common national market.

“Today, every state government, including all Congress ones, is in favour of Goods and Services Tax (GST),” finance minister Arun Jaitley said at a media event.
“You have every political party in Parliament which has said they will vote in favour,” he said.

The Lok Sabha passed the landmark amendment to the Constitution in May 2015, but has remained stuck in the Rajya Sabha, which must endorse the Bill with a two-thirds majority. At least half of the 29 state assemblies will have to ratify it before it finally becomes a law.

The Congress wants the GST rate to be capped at 18% and specified in the bill itself.

This is a departure from the Bill passed in the Lok Sabha, which has not specified the rate.

Jaitley said it is extremely difficult to accept the demand because the Constitution will have to be amended each time the tariffs need to be increased.

According to the Bill, the rates were to be decided by a GST council headed by the central finance minister with state finance ministers as members.

“I think that’s the only glitch. I would still want the Congress to come on board. I can easily see and this is going to happen at this stage of biennial election. The numbers are significantly changing and in any case, I am reasonably confident that the numbers in the Upper House also are in favour of GST,” he said.

The Congress, which for years has been championing the need for replacing the layers of local and regional taxes that have caused red-tape, confusion and corruption with a single levy, has termed the rejigged law of its 2011 version as flawed.

“In the Lok Sabha, the Congress walked out, every other party voted in favour. The Congress party has now made a statement that it has only one issue about the Constitutional cap which is a little difficult because our tariff is not decided through Constitution amendment,” Jaitley said.

On Thursday, the Congress said the government gave “casual treatment” to the GST bill.

“With regard to the GST, which was the brainchild of the UPA government, in the budget they have given casual treatment. They do not find any strategy or a roadmap for its implementation.,” Cong ress leader Veerappa Moily said. The government, however, could accede to the Congress’s demand to scrap the “entry tax” of 1%.

The entry tax was aimed at making GST more equitable amid fears that it can give more revenue to consuming states such as UP, Kerala and West Bengal compared to producing or industrialized states such as Maharashtra, Gujarat or Tamil Nadu.

The Congress, however, has pointed out that such an additional levy will distort the objective of a common national tax, making the system flawed.

Hindustan Times, New Delhi, 18th March 2016