The logjam over the Goods and Service Tax (GST) is half broken. Decks have been cleared for the mandatory amendment to the Constitution. Differences nevertheless persist over the quantum at which the omnibus indirect tax will be capped and applied across the country.
From all available indications, there’s no consensus yet on the taxation rate between stakeholders: within the central government; Treasury and the Opposition; Centre and states and between states.
Sources privy to talks between the government and the Opposition at the Centre were gung-ho about the passage of the Constitution Amendment Bill later this week, most probably on Wednesday. But subordinate GST legislations that will “legally ring-fence” the taxation rate might be delayed until Parliament’s winter session.
The Congress team negotiating with the NDA regime comprises Ghulam Nabi Azad, P Chidambaram and Anand Sharma. They are credited with the view that there’s no clarity yet on the GST rate that, as per the understanding they reached with the government, has to be ring-fenced.
The confusion essentially is over divergent inputs on the prospective rate from the chief economic advisor (revenue neutral rate of 15-15.5%), the national institute of public finance and policy (standard rate ranging from 23-25%), the department of revenue (that’s yet to give out a figure) and states (ranging from 23 to 27%).
The revenue loss between the aggregate of existing state and central taxes and the GST cap could run into several lakh crore rupees. “A lot of work is required to reconcile the gap,” remarked a negotiator.
He pointed to the lack of consensus on the GST rate in the empowered committee of finance ministers of states. The committee will eventually evolve into the GST council for ‘dispute resolution’ on ratification of the Constitution amendment by fifty per cent of state legislatures and passage of three GST laws: central GST, state GST and inter-state GST.
Though the Rajya Sabha was originally slated to amend the Constitution on Tuesday, the debate and the passage of the bill have been rescheduled for Wednesday on the Congress’s request because Opposition leader Azad won’t be in town.
Based on its experience on the GST issue, the Congress has set up another panel of senior leaders to formalise the party’s stance on legislations before the two Houses. It includes P Chidambaram, Anand Sharma, Jairam Ramesh (all RS members) and KV Thomas and Rajiv Satav (Lok Sabha).
The panel will submit reports on individual legislation to the Congress’s floor leaders in both Houses. The exercise will eliminate divergent voices towards a “considered party stance” on the government’s legislative business.