Nine amendments, and GST bill ready

NEW DELHI: India’s biggest tax reform, the Goods and Services Tax bill, is set to cross the Rajya Sabha hurdle to become a reality nine years after it was mooted

NEW DELHI: India’s biggest tax reform, the Goods and Services Tax bill, is set to cross the Rajya Sabha hurdle to become a reality nine years after it was mooted in Parliament.

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The NDA government has secured all-round support for the constitution amendment bill that will be taken up by the upper House for passage on Wednesday and potentially pave the way for rolling out a single tax to replace a string of local levies.

The bill was passed by the Lok Sabha last year but remained stuck in the upper House where the ruling NDA does not have the numbers.

The government circulated nine amendments on Tuesday that aimed to address concerns of the Congress and other opposition parties: more teeth to the grievance redressal mechanism, scrapping a proposed 1% additional tax, and mandatory compensation for revenue loss of states under the new tax regime.

The government said the GST council will establish a mechanism to adjudicate disputes involving the Centre and the states in three possible scenarios: Centre versus one or more states, the Centre and states versus one or more states and state versus state. A standing mechanism to resolve disputes was a key demand of the Congress.

It also accepted a demand of regional parties that tax collected by state governments will not be parked in the consolidated fund of India, to allow quick disbursements.

The concept for a nationwide uniform tax was first announced by then finance minister P Chidambaram in his 2007 budget speech.

The UPA government introduced the constitution amendment bill on GST in the 2011 budget session but failed to build a consensus. The bill lapsed at the end of the last Lok Sabha. The NDA government worked for the past two years to reach out to the opposition parties, especially the Congress, for the GST which will dramatically change the country’s indirect tax regime.

Prime Minister Narendra Modi met Congress president Sonia Gandhi and AIADMK chief J Jayalalithaa to secure support.

“Everyone has the feeling it will be a win-win situation for all. The bill is coming after much deliberation and we are positive about the outcome. We are confident all parties will come together to pass the bill,” said parliamentary affairs minister Ananth Kumar.

Congress vice-president Rahul Gandhi discussed the GST issue with senior leaders, including Mallikarjun Kharge, Chidambaram and Anand Sharma.

In the original bill, the compensation for losses was kept as an option. In the amendment, the Centre has stated that Parliament “shall” provide for compensation to states for any loss of revenue, for a period which may extend to five years.

Trinamool Congress questioned why the government is keeping the option open for giving compensation for a lesser period. The government may bring a fresh amendment on Wednesday to make the compensation mandatory for five years.