Finance Minister Arun Jaitley today said it’s difficult to accept demand of the Congress to cap GST rate in the pending Constitution Amendment Bill. He said the tax rate under the proposed common goods and services tax should be decided by the GST council, comprising both states and the centre.
Both Finance Minister Arun Jaitley and Parliamentary Affairs Minister M Venkaiah Naidu expressed hopes that the proposed law would be passed in the second half of the budget session.
“Today, every state government, including all Congress ones, is in favour of goods and services tax (GST). You have every political party in Parliament which has said they will vote in favour,” he said at the India Today Conclave here.
“In the Lok Sabha, the Congress walked out, every other party voted in favour. The Congress party now made a statement that it has only one issue about the Constitutional cap which is a little difficult because our tariff is not decided through Constitution amendment.”
The GST Bill has already been passed by the Lok Sabha and is pending ratification by the Upper House, where the ruling NDA does not have a majority. After it is approved by the Rajya Sabha, the legislation needs to be approved by half of the 29 states so as to roll out GST possibly by October 1.
Explaining the rationale, the finance minister said, it is extremely difficult to accept because every time you need to increase tariff in a given emergency, you have to amend the Constitution.
The tariff needs to be decided by the GST Council and not by a Constitutional cap, he explained.
“I think that’s the only glitch that remains. I would still want the Congress party to come on board. I can easily see and this is going to happen at this stage of biennial election. The numbers are significantly changing and in any case, I am reasonably confident that the numbers in the Upper House now also are in favour of GST,” he said.
The constitutional amendment to GST, India’s biggest indirect tax reform since Independence, seeks to replace a slew of central and state levies, transforming the nation of 1.3 billion people into a customs union.
The Bill is supported by all parties, barring the Congress, which has 67 MPs in the Rajya Sabha and All India Anna Dravida Munnetra Kazhagam (AIADMK) with 12 members.
The Congress, the original author of the tax reform, is opposed to the current “flawed” version and wants GST rate to be capped at 18 per cent, a proposed state levy scrapped and an independent mechanism to resolve disputes on revenue sharing between states.
The government has support of 155 members in the 242-member Rajya Sabha, short of two-thirds or 162 votes needed to approve the Constitution amendment bill.