With main opposition Congress and most other parties on board, Rajya Sabha on Wednesday night passed a bill to amend the Constitution to facilitate rollout of the historic GST amid government’s assurance that the tax rates would be kept “as low as possible”.
The Constitution (122nd Amendment) Bill, 2014 was approved by the Upper House with 203 votes in favour and none against, after a seven-hour debate during which a rare bonhomie was witnessed among the ruling and the opposition parties.
Six official amendments, including scrapping of one per cent additional tax, moved by the government were approved with cent per cent votes.
The bill was passed by the Lok Sabha earlier. It will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha. The bill will also have to be approved by 50 per cent of all the state assemblies.
AIADMK was the only party to oppose the measure and its members staged a walkout from the House to register their unhappiness over the bill which lays the ground for rollout of uniform Goods and Services Tax (GST) regime that will subsume all indirect taxes including central excise duty and state VAT/sales tax.
The easy passage was facilitated after the main opposition party Congress, which had been stalling the measure for over two years, came on board after the government made about six changes in the bill, including scrapping of 1 per cent manufacturing tax and incorporate clearer provisions for compensating states for revenue loss for five years.
Replying to the debate during which most parties pressed for a Constitutional cap on GST tax rate at 18 per cent, Finance Minister Arun Jaitley said the guiding principle would be to keep the “rates as low as possible, certainly lower than what it is today.”
To bring the Congress on board, the government last week cleared changes in the 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. The government did not, however, accede to the main Congress demand of specifying the GST rate in the Constitution itself. It is likely to be part of the Bill that will be legislated separately by both the Centre and states.