Rajya Sabha panel okays GST bill, suggests five-year central compensation

“The next logical step would be to see through the passage of the bill in the monsoon session of the Parliament without any political disruptions”, he said.

Mr. Jaitley said, “Congress is against the country’s progress…This it has established by giving this dissent note”. With little hope of getting it passed, the government is rather focusing on re-promulgating the ordinance for the fourth time.

Earlier, the Parliamentary panel on the GST bill submitted its report to the Rajya Sabha chairman, backing the bill that has already been passed in the Lok Sabha.

Mani Shankar Aiyar, a Congress lawmaker as well as one of the members of the review committee, said the party will put in dissenting notes. In a clause relating to levy of 1% additional tax by states, the panel recommended that the levy should only on “all forms of supply made for a consideration”. It has given dissent on eight points.

The Committee also said that one per cent additional tax over GST rate will have cascading effect on taxes; suggests change in definition of supply.

The report of the 21member Committee was tabled in Rajya Sabha.

The Centre on Wednesday said it would try to build consensus over the Bill on Goods and Services Tax in the Rajya Sabha but warned the Congress of a citizen backlash if the party blocked the key reform. The Upper House had, however referred the bill to the Select Committee for scrutiny.

To increase the resources of states, the Committee suggested that the “band” rate should be defined in the Act itself. The proposal was included at the behest of states, such as Gujarat, which were playing hardball in joining the GST net.

It rejected the demand of opposition parties for lowering Centre’s say in the GST Council, the current representation of Centre having one-third and states having two-thirds representation will continue.

On compensation to the states for revenue loss following implementation of the GST, the Committee suggested that the Bill should clearly provide for compensation for a period of five years.

“GST should not be in the interest of big corporate houses, who want a free flow of goods and services with the technology promoted and owned by them”, the note added.

The modification pertains to Clause 19 of the Bill, amended model of which now reads as: “Parliament might, by regulation, on suggestion of the GST Council, present for compensation to the states for lack of income arising on account of implementation of GST for a interval of 5 years”. This was a major demand of several parties.

For this, Muralidharan said that even while the government looked at widening the tax base, it could the keep the GST rates moderate at below 20%.

-> In 2010, the 13th Finance Commission recommended 12 per cent GST.