All eyes on GST debate in Rajya Sabha

Division of revenue clarified; govt circulates list of 9 amendments to the Bill

The government on Tuesday circulated among Rajya Sabha members a list of nine amendments to the Goods and Services Tax ( GST) Constitution Amendment Bill, which included yielding to the Congress demand of scrapping a contentious 1 per cent levy on inter- state supply of goods. However, the Bill, which will be taken up in the Rajya Sabha on Wednesday, may still not please some of the Opposition parties as the clause on compensation to states was still vague, sources said.

The other major amendment relates to a provision requiring the GST Council to establish a mechanism for adjudication of disputes between the Centre and states, or among states.

One of the amendments on compensation to states says categorically that the Centre will provide compensation to states for losses under the GST regime. However, sources said, the provision only promises compensation to states for a period that can be extended up to five years. This means that the compensation could be provided for a period of less than five years. Also, the word full compensation was missing, they added. States wanted full compensation for five years, since the Bill passed by the Lok Sabha provided full compensation in the first three years of the GST roll- out, 75 per cent in the fourth year and 50 per cent in the fifth year.

CPI ( M) General Secretary Sitaram Yechury as well as the Trinamool Congress’ Derek O’Brien pointed out some of the amendments in the Bill were vaguely worded. During a discussion in the Rajya Sabha, O’Brien said the list of amendments did not contain amendments to Clause 19 that provided for compensation to states for revenue loss incurred in the first five years.

“The list of amendments circulated by the finance minister does not contain that amendment.
If it is an oversight, it needs to be corrected,” O’Brien said. The chair asked O’Brien to raise the issue on Wednesday when the Bill would be taken up.

The word full compensation has not been incorporated in the official amendments which could be an issue of concern, Jammu and Kashmir finance minister Haseeb Drabu told a TV channel. The Bill, passed by the Lok Sabha, had authorised the GST Council to decide upon the modalities for resolution of disputes, but the Congress demanded the mechanism be spelt out. The government has, thus, accommodated two of the Congress’ three demands.

The amendments clarified that the states’ share of the Integrated GST ( iGST) would not form part of the Consolidated Fund of India, and the term “ iGST” itself was being replaced by “ goods and services tax levied on supplies in the course of inter- state trade or commerce” in clause 12 dealing with apportionment of the proceeds.

It was also clarified that Central GST ( CGST) and the Centre’s share of iGST would be distributed between the Centre and the states. The GST will subsume central excise duty, service tax and state value- added tax or sales tax. Opposition parties, including the Left and regional parties, were undecided whether to push for any amendments of their own in the Bill. Parliamentary Affairs Minister Ananth Kumar said all political parties had come together to pass the bill “ unanimously and now is not the time for hairsplitting”.

All parties have issued whips to their MPs to be present in the Rajya Sabha on Wednesday and also on Thursday when the Lok Sabha is likely to take up the Bill after the Upper House passes it.

Congress Vice- President Rahul Gandhi consulted party leaders Mallikarjun Kharge, P Chidambaram and Anand Sharma, among others, about Wednesday’s strategy in Parliament. Finance Minister Arun Jaitley briefed Bharatiya Janata Party MPs on the Bill at a weekly parliamentary party meeting. Later in the day, Jaitley met officials of his ministry.

Yechury said, “ What we are going to discuss on Wednesday is merely the constitutional amendment that envisages a uniform tax regime countrywide.

The actual GST bill will be considered subsequently, once half the states ratify the constitutional.

Business Standard New Delhi, 03th August 2016

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