GST roll out on July 1 likely
NEWDELHI: The decks are cleared for the roll-out of the goods and services tax (GST) from July 1 after the Rajya Sabha signed off on all four supporting bills on Thursday without making any amendments.
The fact that they were passed without any changes is important as it reflects political consensus around this ambitious tax reform that aims to unite the country into a common market by removing existing tariff barriers.
The Rajya Sabha passed the four draft laws — the central GST bill, the integrated GST bill, the Union territory GST bill and the GST (Compensation to states) bill — after they were all tabled as money bills.
With the Lok Sabha passing these bills last week, they will be enacted once they receive the President’s assent.
The passage of these bills brightens the prospects of a GST roll-out meeting the 1 July deadline — the only major task now left to be resolved is for the GST Council to fit various goods and services into different tax slabs. The GST Council is the representative body of the states and the central government and is schedule to meet in Srinagar on May 18-19 to resolve this task.
The bills were passed after a few opposition parties led by the Trinamool Congress failed to push through amendments to the bills in the absence of support from the Congress party.
However, the government did come under criticism over some of the provisions in the bills, including the powers allocated to the GST Council, the private ownership of the GST Network, and provisions for anti-profiteering, and search and seizure.
Defending the provisions, finance minister Arun Jaitley said the GST Council is an example of deliberative democracy where decisions are taken by consensus. “What you decide in the council becomes a federal arrangement between the Centre and the states and between the states themselves. But Parliament and state assemblies have plenary powers. GST Council recommended these bills and they have come for Parliament’s approval,” he said.
“When GST Council fixes the rates, every state will have to place it in the budgetary provisions. If assemblies have concerns, then they can bring it to the GST council,” he added.
Jaitley also defended the constitution of the GST network (GSTN) and said the government had no plans to review the existing structure — the Centre and the states hold a stake of 49% with the balance held by private banks and other financial institutions.
“There are billions of vouchers that have to be processed. Will you be able to have the flexibility inside the government to hire the best talent in terms of pay and conditions of service,” Jaitley said. He pointed out that despite GSTN being a private body, “there is a deep and pervasive government control in the management structure.”
In a 14-member board, the government has seven seats, while three belong to private institutions and the remaining four are independents, Jaitley said.
Earlier in the debate, Sitaram Yechury of the Communist Party of India (Marxist) stressed that Parliament cannot be ignored and bypassed. “GST Council’s decisions should come to us for our consideration and approval,” he said while pressing for the Council to be brought under the purview of the Comptroller and Auditor General of India.
He also voted for a rate structure that does not burden the lower and middle class.
Congress MP Kapil Sibal pointed out that the anti-profiteering provision along with search, seizure and arrest powers will increase instances of abuse of powers by the taxmen. At the same time, he pointed out that prices are not dependent only on the tax rates but also factor in other things like input prices and market conditions.