In a move that could jeopardise the fate of the GST Bill, the Congress, at the meeting of the select committee on Friday, demanded that alcohol, tobacco and electricity be included within the ambit of the Goods and Services Tax (GST).
The party wants petroleum products to be under GST from the first year itself instead of a gradual inclusion over five years. It has also opposed the 1 per cent additional tax that states were allowed to levy — to be collected by the Centre and eventually devolved to them.
The decision to exclude alcohol, tobacco etc was taken by the empowered group of finance ministers that deliberated on GST for many years. Among the states that pushed for the 1 per cent additional tax were Gujarat, West Bengal and Tamil Nadu.
Even if the Congress is outvoted within the committee, the constitution amendment Bill cannot be passed in the Rajya Sabha without its support — the Congress has 68 members in the 244-member House — unless the party stages a walkout. With some help from the Janata Parivar parties, the GST Bill has hit a roadblock. While the AIADMK opposes the Bill, the Trinamool Congress is in favour, although it is pushing hard for the Rs 4,000-odd crore sales tax compensation.
Congress sources said the party wants five changes, including bringing in tobacco, electricity, alcohol and petrol under the GST regime. These have been exempted so far due to objections from the states.
The Congress also wants removal of the 1 per cent additional tax, imposed over and above the GST to compensate the manufacturing states. The party feels this provision will only benefit states like Gujarat, Maharashtra and Tamil Nadu.
The Congress wants the revenue-neutral GST rate to be kept at 18 per cent and not 27 per cent, and 100 per cent compensation for five years to states for revenue loss due to the switch to the new regime. It also wants the compensation formula to be specified and restoration of the dispute settlement provision in the bill.
The Congress finalised these demands at a conclave of party chief ministers here last month. Party members in the select committee — Mani Shankar Aiyer, Madhusudan Mistry and Bhalachandra Mungekar — raised the demands today. They are expected to table their amendments at the next meeting. Fourteen of the 21 clauses in the Bill were accepted by the committee today.
While these fresh demands will make it difficult for the government to get the Bill passed by the Rajya Sabha, the Congress has smartly sidestepped Finance Minister Arun Jaitley’s recent charge that those opposing GST are anti-development. A uniform GST which includes all commodities and scrapping the 1 per cent flexibility criteria have been the key demands of the industry.