Union finance minister Arun Jaitley met senior Congress leaders and the CPI(M) general secretary in a bid to clinch a deal to push through the long-awaited GST bill in Parliament.
The meetings, which came a day after the Union cabinet approved of amendments to the crucial tax reforms measure, were aimed at reaching an agreement with the Opposition before the bill is brought before the Rajya Sabha next week.
Once adopted, GST will change India’s indirect tax structure by replacing a string of central and local levies such as excise, value added tax and octroi with a single unified tax and stitch together a common national market.
The government agreed on Wednesday to drop the contentious 1% manufacturing tax and to fully compensate states for five years for potential revenue losses after the new system kicks in.
In the bill passed in the Lok Sabha in May last year, the Centre had proposed 100% compensation for first three years, 75% and 50% for the next two years.
However, the select committee of the Rajya Sabha recommended 100% compensation for probable loss of revenue for five years.
{{/usCountry}}However, the select committee of the Rajya Sabha recommended 100% compensation for probable loss of revenue for five years.
{{/usCountry}}The government has also agreed to drop the so-called “entry tax” or “manufacturing tax” of 1%, proposed to protect revenues of producing states like Maharashtra, Gujarat or Tamil Nadu.
The Congress has been pressing for scrapping this levy arguing this will distort the system. The Congress termed the meeting with Jaitley on Thursday “a step in right direction”.
The Congress’s other two demands—capping the GST rate in the Constitution Amendment Bill and a Supreme Court judge-headed dispute resolution body --- have not been accepted yet.