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GST Bill: To get Congress nod for passage, Modi govt makes key changes

GST Bill: Additional 1% tax gone but rate not to be fixed in Constitution.

By: ENS Economic Bureau | New Delhi | Updated: July 28, 2016 4:27 pm
monsoon session, GST bill, GST bill rajya sabha, GST bill cabinet, cabinet gst bill, 1 % tax, congress, rajya sabha, narendra modi, GST bill changes, GST bill dates, GST rate, GST bill rate, arun jaitley, India news, indian express news, gst news GST Bill: Union Finance Minister Arun Jaitley. PTI Photo

To bring the Congress on board the Goods and Services Tax (GST) reform, the government Wednesday cleared changes in the Constitutional Amendment Bill including doing away with the additional 1 per cent tax by producing states and compensating all states for any revenue loss in the first five years post the GST rollout.

Government sources said the Cabinet, headed by Prime Minister Narendra Modi, decided not to accede to the main Congress demand of specifying the GST rate in the Constitution itself. It is likely to be part of the GST Bill that will be legislated separately by both the Centre and states.

The move by the Centre to step up the compensation package comes in the wake of a concerted demand by states at Tuesday’s meeting of the empowered committee of state finance ministers, where a majority of states sought changes in the wording of the Bill to effectively guarantee full compensation for five years against any loss of revenue.

Sources said Finance Minister Arun Jaitley had a short discussion Wednesday with Congress Deputy Leader in Rajya Sabha Anand Sharma, and will likely offer Thursday a draft of the changes to the Constitutional Amendment Bill to senior Congress leaders. A meeting with CPM’s Sitaram Yechury and leaders of some other political parties is also slated.

The Congress demand for further strengthening of the grievance redressal mechanism was also discussed by the Cabinet, government sources said. The Opposition party wanted ‘stronger’ language in Article 279A (11) of the Bill that relates to the mechanism that the Goods and Services Tax Council would adopt for dispute resolution.

Watch Video: GST Bill: Congress Support Likely In Rajya Sabha

 

“The party will go through the draft with a fine-tooth comb tomorrow. We are inching towards a resolution,” a Congress leader told The Indian Express.

The amendments were taken up by the Cabinet after Jaitley assured the state finance ministers to include in the Bill the mechanism of compensating states for all the loss of revenue for five years.

While the select committee of Rajya Sabha had in its report recommended 100 per cent compensation for probable loss of revenue for five years, the Bill provides that the Centre will give 100 per cent compensation to states for first three years, 75 per cent and 50 per cent for the next two years.

With the amendments in place, the Centre will constitutionally guarantee the states against any revenue loss from the transition to GST on account of subsuming of all indirect levies in the first five years of the introduction of the new tax regime. Hiking the compensation formula is likely to impact the financials of the Union government in the fourth and fifth years post the GST rollout.

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The government will likely move the amendments to the Bill in Rajya Sabha after Jaitley meets the leaders of the Congress and other parties, including the Left, in the Upper House to forge a consensus. Once it is cleared in Rajya Sabha, the government will table the amended Bill again in Lok Sabha.

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    Subbu
    Jul 29, 2016 at 7:53 pm
    Feku tried to force Land Aquistation bill but congress never let it happen. Now he tried again for GST BILL and started black mailing Congress saying Congress is anti development,now they understood and and almost agreed to make the bill more acceptable, this is Feku type politics. And INC will never let it happen
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      SubbuI
      Jul 28, 2016 at 2:18 am
      Why this Government didn't have this kind of approach either with INC OR STATE GOVERNMENTS earlier almost for 2 years and then blame Congress. If there is will then there is away.Feku is not sincear in his efforts to get GST Bill ped. Even now we are not sure. Jaatly and Feku still do some thing like let spoiler Swamy to play some dirty game to derail the page of the bill
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        Ajay G
        Jul 28, 2016 at 3:41 pm
        A welcome sign for the nation.......
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          Arvind
          Jul 28, 2016 at 3:59 am
          Let us see how much GST Bill will be effective when it is supported by Congress party which is not at all interested to support bill but due to pressure of other Parties it does not have any option but to support it.However one thing must be kept in mind by Congress Party that voters have kept in their minds that Congress party is not at all interested about Development and Progress Nation otherwise it would supported GST Bill long back.Progress of nation will give Modi Govt upper hand in coming to power after Lok Sabha Election 2019 and strength of Congress Party in Lok Sabha election will come down to a single digit from double digit.Great ber committed by Congress Party for not supporting bill for last 15 months.
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            ashok s
            Jul 28, 2016 at 2:24 am
            Bill should not be ped ,before mechanism of taxation is brought before or made public. For eg if services are taxed at same as goods. Many things like education, utility bills, small time entertainment etc will become costly. The mismanagement of govt finance ,ultimately result in burden for poor netizens
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