The lok Sabha on Wednesday passed the long-pending Goods and Services Tax (GST) Bill after Congress MPs staged a walkout demanding that the Bill be sent to the Standing Committee for scrutiny. The Constitution Amendment Bill to implement the GST was passed by 352 votes against 37. Opposition members moved several amendments to the Bill, which were negated.
The GST, which is proposed to be implemented from April 1, 2016, will subsume Excise, Service Tax, State VAT, Entry Tax, Octroi and other State levies, explained Jaitley in detail to the volley of queries from the Opposition MPs. Ruling Shiv Sena MPs also sought clarifications on the possible loss of revenue to Mumbai Municipality on the scrapping of Octroi to enter the city.
Some members like Saugata Roy of Trinamool Congress and B Mahtab did not move their amendments after assurances by Finance Minister Arun Jaitley. The Government’s promises to provide compensation to the States for revenue loss and to keep low uniform indirect tax rates were repeatedly questioned by AIADMK, BJD and TMC MPs. AIADMK was the lone party which voted against most of the provisions of the Bill, and left parties abstained from voting.
There was confusion on the Congress stand on the Bill, while Deputy leader of Opposition in Rajya Sabha Anand Sharma insisted that the Bill be sent to the Standing Committee, senior Congress lok Sabha MP Veerappa Moily said had the Government earlier consulted with the Opposition then the deadlock could have been avoided.
“In principle we support the GST and the Bill, but not the changes, the way it is being brought in the Parliament. The Bill which we consider to be revolutionary should be sent to Parliamentary Standing Committee for wider consultations of some of its provisions,” Moily said talking to the reporters outside Parliament.
Attacking the Government for changes made in an earlier version of the Bill brought by the UPA, Moily said the NDA should inform the Opposition if it had “decided” not to send Bills to Standing Committees so that they do not “waste the time of Parliament”. He said the Government would not be doing any charity by agreeing to the demand for sending it to the Standing Committee.
On the other hand Sharma said: “Our party’s position is, we supported the GST regime, but the present Bill needs legislative scrutiny,” in an apparent demand for reference to the Standing Committee. However, sources in the party said the party is confused and would count on the number game when the Bill comes for voting.
Replying to the debate on the Bill before the Congress walked out, Finance Minister Arun Jaitley said the proposal to reform the indirect taxes has been pending for the last 12 years and his predecessor P Chidambaram had also mooted it during UPA rule.
Rejecting the Opposition’s demand for referring the Bill to the Standing Committee, he said the panel has already examined various provisions of the new legislation and several of its suggestions have been incorporated.
“A Bill is not a dancing instrument that it will be jumping from Standing Committee to Standing Committee,” he said. Commending the Bill, he said this is a “very important moment” because the whole process of indirect taxation in India will change once the GST is implemented.
With regard to a recommendation of an expert panel for revenue-neutral GST rate of 27 per cent, Jaitley said it is “too high” and will be “much diluted”. He said GST would ensure seamless and uniform indirect tax regime besides lowering inflation and promoting growth in the long run as he sought to allay concerns of the States that they would be hurt by its implementation.
Seeking to address the States’ concerns, the Finance Minister said they will be compensated by the Centre for five years. “Our clear understanding with the States is, in a tapering manner the losses incurred by the States will be fully compensated for five years,” he said. As per the GST structure, 100 per cent compensation would be provided for first three years, 75 per cent for fourth year and 50 per cent for the fifth year.
AIADMK leader M Thambidurai, who is Deputy Speaker of the House, questioned what will happen if States lose revenue even after five years and wanted a guarantee in the proposed Act to compensate.
To this, Jaitley said GST Council will consider all such issues and the Centre will underwrite the loss. Thambidurai repeatedly cornered the Finance Minister on the manufacturing State’s apprehensions on the possible revenue.
The Finance Minister said concerns of both manufacturing States like Maharashtra, Tamil Nadu and Gujarat, and other consuming States have been taken into account and States would stand to gain by implementation of GST. The new measure will also benefit mineral-producing States as well, Jaitley said after members from Odisha asked about the fate of their States.
Questioning opposition by Congress to the Bill, Jaitley recalled that Chidambaram had been pushing it earlier. To this, Congress leader Moily said this was not a matter between two Finance Ministers. Hitting back, Jaitley said, “you may have disowned all of your Finance Ministers, but the country cannot.”
“It is erroneous to take GST as a UPA-NDA issue. GST is a Centre and State issue,” he said. Asserting that the Government is committed to cooperative federalism, Jaitley said: “Federalism means strong States but it doesn’t mean a weak Centre.” He was responding when some members questioned why the Centre should have a veto power in voting GST Council even while having 1/3rd weightage in voting.
Meanwhile, BJP has decided to issue a whip to its MPs in both Houses of Parliament till Friday to ensure their presence to help pass two constitutional amendment Bills pertaining to GST and land boundary agreement with Bangladesh, besides other key legislations. Stating that the two legislations were in the country’s interest, the Government said the amendment Bill to introduce GST will come up in Rajya Sabha on Thursday while the one to operationalise the land boundary agreement with Bangladesh will be taken up in lok Sabha.