With half the state legislatures expected to ratify the Constitution amendment bill to roll out goods and services tax (GST) by early September, the Centre is now moving to the next stage — deciding on the contentious issue of fixing the rates — so that the ambitious reform initiative is in place by April .
Sources said the finance ministry is set to hold consultations on the GST rate – which several states suggest should be upwards of 20% to protect their revenue – as well as the other legislations which need to be cleared by Parliament during the winter session for the new tax regime to kick in from April.
Depending on the progress in setting up the GST council and an agreement on the contentious issue of rates, the winter session of Parliament might be brought forward to early November. But government sources emphasised that the rate and related issues would need to be ironed out.
Apart from the politically crucial discussions on the rate, some of the other contentious issues, such as the cut-off turnover under which state authorities will have jurisdiction over entities, will pave the way for states to enact their own GST legislations.
Once 16 states ratify the Constitution amendment, and the President notifies it, the stage will be set for formation of the GST council, which will be the authority on deciding rates. Once the rates are decided, the upper limit will be included in the bill that will be moved in the Centre.
At least eight states have already shown the green flag to the Constitution amendment bill that was approved by Parliament. To ensure implementation of GST, the bill needs to be ratified by at least half the 29 state assemblies. It is set to cross the halfway mark comfortably despite the lukewarm response from some non-NDA ruled states. Several states have convened special sessions of their state legislatures to discuss the Constitution amendment bill on GST. Rajasthan is expected to give its nod during the assembly session that has been convened from September 1.
The proposed levy will be a single tax that will cover all levies at the Centre and state levels, including entry tax. It is a value-added tax, which means a levy at each stage of production, sale or consumption will be set off against taxes paid in the previous stage. It is expected to benefit consumers and help government revenues and add to overall economic growth.
Three non-NDA ruled states — Himachal Pradesh, Bihar and Delhi — have approved the bill. Kerala and Uttarakhand have convened special sessions to give the go-ahead. NDA-ruled Maharashtra too is expected to join the list of approvers at the one-day session on August 29. The government has discussed the issue with all parties to ensure smooth passage and with the Shiv Sena on board, the bill is expected to be approved.
Telangana has called for a special session on August 30 to get the bill approved
Some non-NDA states, however, are still dragging their feet. The Tamil Nadu assembly is silent on the issue. In fact, AIADMK members had staged a walkout during the voting for the Constitution amendment bill in Rajya Sabha.
West Bengal which had strongly supported passage of the bill, seems to have adopted a wait-and-watch policy as it has deferred the date for the debate on the issue. Karnataka is also taking its own time to approve the legislation.
Industries minister R V Deshpande told TOI that the GST legislation could not be passed without adequate preparation. “The finance department is on the job and conducting training programmes and it’s just a matter of time,” he said. Asked if the government would bring the amendment bill in the winter session, the minister said, “Possibly yes. Hopefully, we will be ready by then.” He agreed that the ‘one nation, one tax’ regime will definitely help Karnataka’s growth and also help draw investments.
Source: Times of India