RS panel seeks changes in GST bill on compensation to states

In the dissent note they said the Congress has objected to the proposed composition of the GST Council, imposition of one per cent additional manufacturing tax by states, and demanded safeguarding of revenue of panchayats and municipal bodies.

The select committee on Goods and Services Tax submitted its report in the Rajya Sabha earlier today with a proposal for three modifications to the Bill.

In case of the provision for levying 1 percent additional tax by states to cover their losses due to abolition of local levies, owing to implementation of GST, the committee has suggested the levy should only apply to “all forms of supply made for a consideration”. The government aims to roll out the GST, a new indirect tax regime, from April 1, 2016.

After more than a decade of drawn-out negotiations, the lower house of Parliament on May 6, 2015, passed the Constitutional Amendment Bill to enable states to levy the GST on services, which was seen as a major step towards the adoption of GST in India.

The Congress on Monday moved dissent on the report of a parliamentary panel on the General Sales Tax (GST) Bill expressing inability to support the legislation, saying that it is based on compromises and exclusions.

The Bill, which has been approved by the Lok Sabha, is being scrutinised by a Committee of Rajya Sabha. Not only do the outstanding issues need to be ironed out, but the ruling BJP Party lacks a majority in the Rajya Sabha, where the bill will need the approval of at least two thirds of the members before it can be signed into law by the President.

The committee has suggested that the provision in the bill that provided Centre “may” compensate states for a period up to five years for any revenue loss be substituted by a commitment for compensation for five years.

The government reiterated in the Upper House that it is ready for a discussion on Sushma Swaraj controversy. “The efforts of the central and state governments would be to have a reasonable rate of GST so that it is a successful experience for the whole country”, revenue secretary Shaktikanta Das told reporters here. “If the Committee makes a lot of suggestions and recommendations, we may have to bring in a new Bill”.

Krishnan said that the departments concerned are now discussing issues like the rates to be applied, threshold limits of exemptions and compounding, the list of exempted goods and services, dispute resolution mechanism and the distribution of responsibility between the centre and states in implementing GST, among others.