Parliament on Monday passed the Constitution Amendment Bill, paving the way for making the Goods and Services Tax (GST) regime a reality with Prime Minister Narendra Modi terming it as a “crucial step” towards ending tax terrorism, reducing corruption and black money.
Expressing gratitude to all parties for the support, Modi told the lok Sabha that the new regime will make the consumer the “king”. All parties except the AIADMK supported the Bill. AIADMK MPs staged a walkout during voting, reiterating their objections and demands for more compensation packages to the manufacturing States.
Intervening in a debate on Constitution (122nd Amendment) Bill, Modi asserted that the GST will benefit mainly those States which are considered backward and address the problem of imbalanced development. He acknowledged that manufacturing States will suffer losses but said they will be compensated.
He emphasised that the passage of the GST Bill by Parliament was not a victory of any party or Government but was everybody’s victory as it highlighted the success of the democratic ethos of the country.
“August 8 marks a crucial step towards freedom from tax terrorism,” said the Prime Minister, while recalling that this was the day in 1942 when Mahatma Gandhi had sounded the bugle of ‘Quit India’ which marked a major step towards the country’s Independence.
He said he had held consultations with his predecessor Manmohan Singh and Congress president Sonia Gandhi on the issue. “Rashtra niti (national policy) is above raj niti (politics).... I thank all political parties, as also State Governments run by different parties. We are taking such a decision. We have reached here after churnings in the lok Sabha, the Rajya Sabha, 29 States, their representatives and 90 parties. We are putting a stamp on the final decision,” Modi said.
Underlining that the development marks the “recognition of One India” and strengthens this concept, he said, “We are aligning ourselves with new taxation regime... GST is a new ‘moti’ (bead) in this ‘maala’ (necklace).”
He coined the GST in a new manner -- ‘Great Step by Team India’, ‘Great Step towards Transformation’, ‘Great Step towards Transparency’.
Responding to Congress’ contention that GST was its idea being implemented by the NDA Government, he acknowledged that all political parties and previous Governments had contributed to making of the Bill. In this context, the Prime Minister quipped, “janam koi de, lalan palan koi kare. Krishna ko janam kisne diya, bada kisne kiyaIJ (Somebody may give birth, but someone else may nurture. Who gave birth to lord Krishna and who brought him upIJ)”
At the same time, he said, “We do not have ‘guroor’ (arrogance) that his Bill is the perfect one” even though “so many brains have made an effort which will have results”.
Initiating and intervening in the end of the debate, Finance Minister Arun Jaitley reiterated that implementation of GST will reduce tax evasion and improve ease of doing business by engendering a common market throughout the country.
“GST will ensure one tax in the entire country. It will result in seamless transfer of goods and services in the country...This is a major indirect tax reform, which, in long run, will be in interest of the country,” he said, adding the Centre has addressed concerns of all the States.
The lok Sabha, which had already passed the GST Constitution Amendment Bill in May 2015, took it up again to approve the modifications made in it by the Rajya Sabha last week. The Government had moved six official amendments, including scrapping of 1 per cent additional tax.
On the vexed question of GST rate which may have implications for inflation, Jaitley said it would be decided by the GST Council, which will comprise representatives of the Centre and the States. As regards the issue of the States giving up sovereign power to levy taxes, the Minister said it is not the case, “the States and the Centre will be pooling in their sovereignty together and creating a new mechanism which will take all its decision within that pooled sovereignty”.
Jaitley further said the new tax regime will “check leakages, increase tax base for the Centre and the States, eliminate cascading effect of tax on tax, reduce tax evasion and improve ease of doing business.”
Initiating a debate on the Bill, Veerappa Moily of the Congress said his party supports the proposed legislation which provides for ushering in a single indirect tax regime across the country by subsuming various taxes. At the same time, he said the Centre should keep the tax rate low under the new GST regime and bring the subsequent legislations as Finance Bills instead of Money Bills.
He said GST should not be in “vested interest” of the Centre and the States and the Government should specify the “neutral agent” who will ensure that the common man does not become a casualty of the new indirect tax regime.
P Venugopal (AIADMK) opposed the Bill, saying Tamil Nadu is a manufacturing and originating State which will suffer while consuming States will benefit. The concerns raised by party chief J Jayalalithaa have not been taken into consideration by the Centre, he said. He cited various issues raised by the party including that GST Council should not be a Constitutional body and petroleum products should be kept permanently outside the purview.
On the April 2017 deadline, Moily said it is too optimistic to think that the entire process will be finalised within 10 months. “You have given a roadmap, but there is no flesh or bones,” Moily said, adding “half-baked legislation brings in more difficulty”
While supporting the Bill, Kalyan Banerjee (TMC) said State revenues should not be affected in case of GST and compensation should be paid in full for five years as the proposed amendment does not talk of full compensation.
Making an intervention, Deputy Speaker M Thambidurai said, “In relay race, the last person gets credit.” Supporting the Bill, Tathagata Satpathy (BJD) said the legislation will attack and erode the very independence of States. “We support GST in principle but we have moved amendments,” he said.
“We should not leave GST to bureaucracy... I would urge the Centre to share clean energy fund with coal producing States.”
Anandrao Adsul (Shiv Sena) said his party supports the Bill but octroi and cess should be worked out as it not only provides revenue but also helps movement of goods freely.
P Karunakaran (CPI-M) said GST being a regressive tax, it would hurt the poor. Hence, the aim of the tax should be to minimise its impact on the poor. While supporting the law, he sought to know from the Finance Minister as to how the states would raise their resources in the event of a catastrophe or a disaster.