Seen as the biggest tax reform after 1947, the Goods and Services Tax (GST) Bill that intends to “unify,” “simplify” and “harmonise” the country’s varied tax regime was moved in the lok Sabha on Friday for consideration amid vociferous objections by Opposition parties, even as Finance Minister Arun Jaitley assured that it was a “win-win situation” for the Centre as well as for the States.
Members of Congress, TMC, left, NCP and BJD argued that it was a “new Bill” and needed to be sent to the Standing Committee for further vetting. The consideration of the Bill was also opposed by AIADMK, whose leader and Deputy Speaker M Thambidurai contended that it should be scrutinised by the Standing Committee as his State Tamil Nadu would stand to lose to the tune of Rs16,000 crore.
While the Congress, TMC, left and NCP staged a walkout as their demand was not accepted by Speaker Sumitra Mahajan, AIADMK and BJD stayed back in the House, with Jaitley later, seeking to ally their apprehensions on the Bill. Jaitley on Wednesday had held discussions with State Finance Ministers to bring consensus on this Constitutional Amendment Bill, which will have to be passed by two thirds majority.
So far, 18 States have endorsed the draft of the Constitutional Amendment Bill on GST. Despite muscle-flexing by Opposition parties in lok Sabha, the Government hopes that it will be able to persuade them to back the measure. A consensus on the Bill is must since the Government lacks even simple majority in Rajya Sabha.
Though the Congress staged a walkout in the lS, later the party said it was not opposed to the Bill per se. Party spokesperson Abhishek Singhvi accused the ruling dispensation of practicing “subterfuge, deceit and a hidden agenda” but at the same time made it clear that the Congress was opposing the manner of bringing the GST Bill and “not the concept” of it as the move for GST was initiated by the UPA.
“We are not opposing the Bill. It is our Bill. We are only opposing the manner in which they are pushing the Bill. After delaying the Bill for years, what was the hurry to bring the Bill without a thorough discussion,” he said.
Opposition parties quoted rules and together with AIADMK demanded that financial business must be finished before moving any Bill. Jaitley assured all cooperation from the Government to complete the business of demands for grants of various Ministries before Guillotine is applied on April 28. After several leaders, Deepender Hooda and KC Venugopal, Mallikarjun Kharge (all Congress), Bhartruhari Mahtab (BJD) had given their views, Speaker Sumitra Mahajan ruled that it is an important legislation on which the Finance Minister can make introductory comments and a discussion can be taken up at a later date.
The Speaker said when the Bill was introduced in the House on December 19 last year, it was decided that it will not be sent to the Standing Committee. The Business Advisory Committee (BAC) of the House decided on March 16 to list it for consideration, she added.Protesting the Speaker’s ruling, the Congress, led by Sonia Gandhi along with TMC, left and NCP trooped out of the House.
Moving the Constitution Amendment Bill for consideration, Jaitley maintained that the process of bringing the Bill had started during the previous NDA rule in 2003 and the last UPA Government had pushed it and the Parliamentary Standing Committee had also examined it for over two-and-a-half years. “I think we did not have a more extensive debate on any Bill since 1950.”
Appealing for support of Congress before its members walked out, the Finance Minister said: “Nobody has the monopoly in trying to stop the growth of this country. UPA must start supporting legislations which it brought in. This is a kind of contradiction I am not able to understand.”
The Finance Minister said GST is going to lead to a win-win situation as far as the Centre and the States are concerned. He said GST would increase India’s GDP and revenue. He assured the members that implementation of the GST would not lead to loss to some States, including Tamil Nadu. Jaitley pointed out that the Centre and the States will have concurrent power to levy tax on goods and services.
He pointed out that when Value Added Tax (VAT) was introduced, States demanded compensation for more than five years. However, not a single State asked for compensation in the sixth year.
“Therefore, please do not have this fear (of revenue loss on account of GST implementation),” he said, adding, besides, ease of doing business, GST will help “trade to grow and taxation revenue of States will not be lost in any manner”.
He said the Congress should be happy that the NDA brought the legislation. “Why are you delaying itIJ It was good work done by your Government which we not only accepted, completed and are going forward with. Don’t delay the process you started.”
Jaitley stressed that it was in the “wisdom of Parliament and wisdom of State Finance Ministers to converge so that a consensus is arrived at” as he noted that it has gone through two Central Governments and four State Finance Ministers in the capacity of heads of Empowered Group of Ministers.
On the compensation to the States on account of any possible loss of revenue following implementation of the GST, Jaitley said there will be 100 per cent compensation in the first three years, 75 per cent in the fourth year and 50 per cent in the fifth year.
The Bill on GST, seen as the biggest tax reform after 1947, was introduced in the lok Sabha in December last year. A single rate of GST will replace Central Excise, State VAT, Entertainment Tax, Octroi, Entry Tax, luxury Tax and Purchase Tax on goods and services to ensure seamless transfer of goods and services. liquor has been completely kept out of the GST.