The Maharashtra legislative assembly will have a special sitting on today to consider ratification of the Goods and Services Tax (GST) Constitutional Amendment Bill passed by Parliament.
In the 288-member Maharashtra assembly, the Bharatiya Janata Party (BJP) and Shiv Sena (SS) alliance has a majority of 185. With the opposition Congress and Nationalist Congress Party (NCP) in favour of GST, the state legislature is set to ratify the bill unanimously.
“It was passed by all parties in the parliament and I do not see any reason why it should not be ratified unanimously in Maharashtra,” said Maharashtra finance minister Sudhir Mungantiwar.
Senior NCP leader and former Maharashtra finance minister Jayant Patil said the party would support the legislation but it also expected a discussion on the provisions in the assembly. “It is a bill and there has to be a discussion before it gets ratified,” Patil said.
The 122nd Constitutional Amendment Bill passed by Parliament needs at least 16 states to ratify it before it could be sent for presidential assent. So far, nine states including three states not ruled by the BJP-led National Democratic Alliance (NDA) have ratified the bill.
Maharashtra, India’s leading manufacturing state with a large service sector economy as well, is estimated to suffer a revenue loss of around Rs.18,000-20,000 crore per annum if the GST rate is capped at 18%, according to a state finance official who did not wish to be named.
“Of this, around Rs.6,500 crore will be the revenue loss only on account of octroi duty in Mumbai getting subsumed under GST. The other Rs.12,000 crore to Rs.13,500 crore will be lost because GST will replace other taxes like central sales tax, value added tax, entertainment tax, and some other minor taxes,” the official said.
But he added that this loss of revenue will be felt intensely only during the initial years of GST implementation. “The amendment proposes to compensate all states for five years after which the system should stabilise,” the official said.
In order to compensate the Brihanmumbai Municipal Corporation (BMC) for the loss of octroi, the Maharashtra government will also bring in a bill that facilitates direct compensation to the BMC, Sudhir Mungantiwar said.
BJP’s ally Shiv Sena, which is the senior partner ruling the BMC, has demanded direct compensation to BMC and a legal provision to sanction it.