The Bharatiya Janata Party-led government will have to walk the extra mile if it wants to ensure the passage of the much-delayed Goods and Services Tax bill in the winter session of Parliament, after the opposition Congress on Thursday said its three proposed amendments are non-negotiable.
Billed as India’s biggest tax reform since Independence, the Goods and Service Tax is a single tax on any supply of goods or services and would replace excise, service tax, state Value Added Tax, entry tax, octroi and other state levies. GST would help collapse barriers between states and potentially spur growth.
The Congress and other opposition parties, including the Left parties and the All India Anna Dravida Munnetra Kazhagam, had stalled the crucial economic reform bill in the Rajya Sabha in the monsoon session, forcing the government to send the bill to a parliamentary select committee for further scrutiny.
As the winter session of Parliament commenced on Thursday, Congress president Sonia Gandhi and vice-president Rahul Gandhi made it clear that the party would not climb down on the three concerns it flagged during the monsoon session of Parliament. The party has consistently maintained that it will cooperate with the government to pass the GST bill so long as its apprehensions are addressed.
Opposition's objections
A dissent note submitted by the Congress had initially listed eight objections to the bill, but the party has narrowed these down to three. These include a constitutional cap of 18% for GST rates, doing away with the additional one percent tax levied by manufacturing states, and the constitution of an independent dispute-resolution mechanism.
In separate dissent notes, the AIADMK and Left parties underlined that some of the provisions in the bill impinged on the legislative sovereignty of both Parliament and state legislatures. The AIADMK also wanted to keep petroleum products and tobacco out of the GST regime.
Until now, the government has been dismissive of the Congress' demands, calling them “preposterous and impractical”. Finance Minister Arun Jaitley has given a series of interviews over the past week in which he has explained that the amendments proposed by the Congress could not be accepted.
Jaitley also claimed to have reached out to Congress leaders to seek the party’s support on the GST Bill, meeting them last week to hand out an invitation for his daughter’s wedding. However, Sonia and Rahul Gandhi maintain there has been no attempt by the government to break this logjam.
As things stand, the ruling alliance faces an uphill task in getting the bill passed. With both sides sticking to their guns, it is not clear how the government plans to resolve these differences. It will be particularly difficult for the government to accept the Congress demand to do away with the additional 1% tax as this was specially introduced to compensate manufacturing states like Gujarat, Maharashtra and Tamil Nadu, which vetoed the bill when the Congress-led central government first moved it.
Prime Minister Narendra Modi, who was Gujarat’s chief minister at the time, had pushed for the Bharatiya Janata Party to oppose the bill, arguing that manufacturing states would suffer a loss should GST be implemented.
The proposed GST is to be levied concurrently by both the Centre and states. The most prominent hurdle in introducing this new tax structure has been the struggle between the states and the Centre on the loss of revenue.
Getting the Congress on board
The National Democratic Alliance’s floor managers initially believed that they could secure the passage of the bill by isolating the Congress. For instance, it succeeded in winning over the Trinamool Congress with the promise of a hefty compensation package for West Bengal for the revenue loss for five years after the introduction of GST. It even agreed to incorporate this provision in the Bill.
However, the government soon realised that it could not overlook the Congress, as the GST Bill is a Constitutional amendment bill, thus requiring the approval of two-thirds of the House. As the ruling alliance is a minority in the Rajya Sabha, it has to necessarily get the Opposition on board. Its willingness to talk to the Opposition stems from the realisation that it cannot pass the Bill with the help of regional parties alone.
The Narendra Modi government has set April 2016 as the deadline for the implementation of GST. The rollout can only go ahead on time if the bill is passed in the winter session, which ends on December 23.
Delayed consultations
A senior Union minister maintained that the government wants to “take the Congress along” on this issue, as the United Progressive Alliance is the original author of the legislation. “Five finance ministers have drafted the bill,” the minister said. “Moreover, it is a constitutional amendment bill. We would like to forge a consensus on this issue.”
The government claimed that 30 of the 32 parties which attended the all-party meeting called by parliamentary affairs Minister M Venkaiah Naidu on Wednesday wanted the GST bill passed at the earliest. Some Union ministers said that the government would get in touch with the Congress in the coming days to see if the two sides can strike a compromise. These consultations will pick up speed after the two-day discussion on the Constitution.
While this discussion will conclude on Friday in the Lok Sabha, it has spilled over to Monday in the Rajya Sabha as the Upper House was adjourned on Thursday following the death of a sitting member. Since the GST bill is pending in the Rajya Sabha from the previous session, it will be taken up first in the Upper House.
Billed as India’s biggest tax reform since Independence, the Goods and Service Tax is a single tax on any supply of goods or services and would replace excise, service tax, state Value Added Tax, entry tax, octroi and other state levies. GST would help collapse barriers between states and potentially spur growth.
The Congress and other opposition parties, including the Left parties and the All India Anna Dravida Munnetra Kazhagam, had stalled the crucial economic reform bill in the Rajya Sabha in the monsoon session, forcing the government to send the bill to a parliamentary select committee for further scrutiny.
As the winter session of Parliament commenced on Thursday, Congress president Sonia Gandhi and vice-president Rahul Gandhi made it clear that the party would not climb down on the three concerns it flagged during the monsoon session of Parliament. The party has consistently maintained that it will cooperate with the government to pass the GST bill so long as its apprehensions are addressed.
Opposition's objections
A dissent note submitted by the Congress had initially listed eight objections to the bill, but the party has narrowed these down to three. These include a constitutional cap of 18% for GST rates, doing away with the additional one percent tax levied by manufacturing states, and the constitution of an independent dispute-resolution mechanism.
In separate dissent notes, the AIADMK and Left parties underlined that some of the provisions in the bill impinged on the legislative sovereignty of both Parliament and state legislatures. The AIADMK also wanted to keep petroleum products and tobacco out of the GST regime.
Until now, the government has been dismissive of the Congress' demands, calling them “preposterous and impractical”. Finance Minister Arun Jaitley has given a series of interviews over the past week in which he has explained that the amendments proposed by the Congress could not be accepted.
Jaitley also claimed to have reached out to Congress leaders to seek the party’s support on the GST Bill, meeting them last week to hand out an invitation for his daughter’s wedding. However, Sonia and Rahul Gandhi maintain there has been no attempt by the government to break this logjam.
As things stand, the ruling alliance faces an uphill task in getting the bill passed. With both sides sticking to their guns, it is not clear how the government plans to resolve these differences. It will be particularly difficult for the government to accept the Congress demand to do away with the additional 1% tax as this was specially introduced to compensate manufacturing states like Gujarat, Maharashtra and Tamil Nadu, which vetoed the bill when the Congress-led central government first moved it.
Prime Minister Narendra Modi, who was Gujarat’s chief minister at the time, had pushed for the Bharatiya Janata Party to oppose the bill, arguing that manufacturing states would suffer a loss should GST be implemented.
The proposed GST is to be levied concurrently by both the Centre and states. The most prominent hurdle in introducing this new tax structure has been the struggle between the states and the Centre on the loss of revenue.
Getting the Congress on board
The National Democratic Alliance’s floor managers initially believed that they could secure the passage of the bill by isolating the Congress. For instance, it succeeded in winning over the Trinamool Congress with the promise of a hefty compensation package for West Bengal for the revenue loss for five years after the introduction of GST. It even agreed to incorporate this provision in the Bill.
However, the government soon realised that it could not overlook the Congress, as the GST Bill is a Constitutional amendment bill, thus requiring the approval of two-thirds of the House. As the ruling alliance is a minority in the Rajya Sabha, it has to necessarily get the Opposition on board. Its willingness to talk to the Opposition stems from the realisation that it cannot pass the Bill with the help of regional parties alone.
The Narendra Modi government has set April 2016 as the deadline for the implementation of GST. The rollout can only go ahead on time if the bill is passed in the winter session, which ends on December 23.
Delayed consultations
A senior Union minister maintained that the government wants to “take the Congress along” on this issue, as the United Progressive Alliance is the original author of the legislation. “Five finance ministers have drafted the bill,” the minister said. “Moreover, it is a constitutional amendment bill. We would like to forge a consensus on this issue.”
The government claimed that 30 of the 32 parties which attended the all-party meeting called by parliamentary affairs Minister M Venkaiah Naidu on Wednesday wanted the GST bill passed at the earliest. Some Union ministers said that the government would get in touch with the Congress in the coming days to see if the two sides can strike a compromise. These consultations will pick up speed after the two-day discussion on the Constitution.
While this discussion will conclude on Friday in the Lok Sabha, it has spilled over to Monday in the Rajya Sabha as the Upper House was adjourned on Thursday following the death of a sitting member. Since the GST bill is pending in the Rajya Sabha from the previous session, it will be taken up first in the Upper House.
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