Posited as one of the big ticket reforms in the indirect taxes regime since Independence, the Goods and Services Tax (GST) bill is likely to undergo two significant amendments as members from all parties in the parliamentary committee have near unanimously demanded compensation for all states for next five years and permit them to levy surcharge on cigarette and tobacco products.
The GST legislation is being examined by the parliamentary committee which is expected to submit its recommendations by 24th July. The Narendra Modi government is keen to enforce the GST from April 1, 2016, the next financial year. According to sources, the Committee has discussed each provision threadbare. The Committee is expected to give it a final shape tomorrow in its last meeting.
The Congress and Left parties in the Opposition are also readying their dissent note on the bill when it comes up for discussion in the session. Major Opposition party in Rajya Sabha, the Congress, is unlikely to support the bill because of contention that in its current form, the reform is neither easy to implement nor inclusive on many fronts. Congress wants a cap of 18 per cent in the GST and is opposed to surcharge of one per cent by the states.
The bill was approved by the Lok Sabha in the Budget session as the government enjoys a majority there. But in the Rajya Sabha, it was referred to the Committee as the National Democratic Alliance does not have a majority to bypass the Opposition. Sources said members of all parties have asked compensation to states be extended to five years while the bill has a provision for three years only. Besides compensation, the parties are also demanding liberty to the states to levy surcharge on cigarette and tobacco products.
However, the government has proposed only a three-year window for compensation to the losses accrued by the states because of GST rollout and has kept the power to levy surcharge on cigarette and tobacco products with the Centre only. Keen to see the bill through the Monsoon session, the government is determined to find a way forward by taking into consideration the proposals made by the Committee. Trinamool Congress has already given its assent. The government may find the Bill easy to pass, once it wins the support of the Congress.