The Goods and Services Tax bill that aims India’s most expansive tax reforms, may be amended further as all parties have demanded full compensation to states for five years.
The Rajya Sabha panel examining the bill may also ask the government to allow states to impose their own levies on cigarettes and tobacco products.
The Centre had earlier proposed 100% compensation to states for first three years to cover their potential losses due to abolition of local levies. It had also retained the power to tax tobacco products.
At the meeting of the Rajya Sabha select committee on GST on Friday, the demands for full compensation for 5 years and Shiromani Akali Dal member Naresh Gujral’s demand to allow states to impose taxes on tobacco found overwhelming support among members.
The Congress’s proposals to cap the GST rate at 18% and to keep tobacco and electricity surcharge kept within the GST found no takers. The government, however, needs the Congress on board to pass the constitutional amendment bill to roll out the GST.
While the other key reform-related legislation, the land acquisition bill, faces uncertain future, the select committee on GST has decided to finalise its report before the monsoon session begins in July 21.
GST bill had passed the Lok Sabha test in the budget session but the government decided to refer the bill to a select panel to woo the Congress. The government plans to roll out the path-breaking, uniform tax regime across the country from April 1, 2016.