Fate of GST Bill in Rajya Sabha

Fate of GST Bill in Rajya Sabha

The much talked about GST Regime has been creating a buzz amongst all, eagerly waiting for the monsoon session of the parliament to commence with the hope that the 122^nd Constitutional Amendment (GST) Bill, 2014 (“CAB”) will be passed.  The Rajya Sabha select committee on GST cleared its draft report by supporting the larger points proposed by the Government in the bill and by recommending a liberal compensation package for States.

 In the process, the panel shot down all points of objections raised by the Congress, prompting the party representatives to submit dissenting notes demanding 15 amendments to the bill.

Select panel arrives at middle ground on GST

A Select panel of Rajya Sabha is understood to have recommended a mechanism to do away with the contentious issue of a cascading effect of 1% tax on inter-state supply of goods and is believed to have suggested the tax to be made liable only in the case of inter-state supply of goods for a consideration, which might mean the movement of goods within the same company will not be subject to such extra tax.

It also accepted a demand by most States that the Constitution amendment Bill on GST should provide full compensation to them of the revenue loss for five years.

The committee, sources said, it was also understood to have recommended moderate GST rates, with as many goods under it as possible. However, the rates would be decided by the proposed GST council and these wouldn’t be part of the Constitution amendment Bill. The sub-panel of the empowered committee of State finance ministers had recommended a RNR of 27% which currently is being looked into by a committee headed by Chief Economic Advisor Arvind Subramanian and its report will be submitted within 4-6 weeks.

The Congress puts down its objections to the GST Bill in writing

Now that the report has been formally adopted, it will be submitted to the Rajya Sabha later this week. While the Congress has appended a four-page dissent note and submitted on Monday, the following 8-point dissent note to the bill:

1. Ceiling the GST rate @ 18%.
2. Setting up of a GST Compensation Fund.
3. Clear definition of the word “Supply/ies”.
4. Tobacco and tobacco products, alcohol for human consumption and electricity supply should be included in clause 12 of CAB with a condition of being included by the council within 5 years.
5. Voting share of States to be increased to 75%.
6. Setting up of GST Dispute Settlement Authority to be set up.
7. Sources of revenue of the Panchayats and Municipalities must be safeguarded.
8. Special consideration by the council towards States and Union Territory who’s population does not exceed 20 lakh.

Fate of the Constitution Amendment Bill

There exists uncertainty with regard to the passing of the GST Bill endorsed by the select committee of RS as Congress, the largest party in the Rajya Sabha where the BJP–led alliance is in a minority, could insist on the changes it proposed in the Bill, when it comes to voting.

Passage of the Constitution (122nd Amendment) Bill in the Rajya Sabha requires two-third majority. That is an arduous task for the Government given that in the 245-member House, the ruling coalition has only 65 seats, while Congress has 69

The absence of a few political parties including Trinamool Congress at the meeting of the select panel has made their support towards the Bill uncertain.

As per the political observers if the Bill is not passed in the monsoon session, the April 2016 deadline would be too ambitious as it will get postponed to the winter session, and will be required to be ratified by more than half of the States and Central and State laws of GST enacted in time.

Source: Compilation from Business Standard and The Financial Express.

Hope the information will assist you in your Professional endeavours. In case of any query/ information, please do not hesitate to write back to us.

Thanks & Best Regards, 

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.

Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.