Monsoon break: Parliament may pass GST bill this session

Over six years after the Goods and Services Tax (GST) was first introduced in Parliament and countless parleys between the government of the day and the opposition, the stage appears to be set for its passage in the ongoing monsoon session of Parliament with Congress indicating "substantial progress" and a "near breakthrough" on the new tax regime.

Senior Congress leaders on Thursday said on condition of anonymity that the government had agreed to "most" of the party's demands for amendments to GST. However, the final draft was awaited, they said.

The Congress leaders said the government had already accepted one of its three demands of compensating states for revenue loss over five years after rollout of GST. The union cabinet had on Wednesday cleared changes in the GST Constitutional Amendment Bill, dropping one per cent manufacturing tax and providing guarantee to compensate states for any revenue loss in the first five years.

"They have not accepted our remaining demand of capping GST rate through a constitution amendment provision," they said. Now the discussions revolve around the GST cap and whether it comes under purview of the GST Council.

While differences have narrowed down between the government and Congress on the bill, brought first during the Manmohan Singh regime, the Business Advisory Committee (BAC), which had last week allocated five hours for it, has not yet listed the bill.

Meanwhile, non-Congress Opposition parties, which have been backing GST, have sought an assurance from the Centre that states should have flexibility in raising resources as the new tax regime would deprive them of the right to impose sales tax, surcharge or even cess in case of a calamity. This was conveyed to finance minister Arun Jaitley on Thursday when he met leaders of the CPM, CPI, Samajwadi Party, Trinamool Congress and the Biju Janata Dal, as part of an exercise to reach out to political parties to evolve consensus on GST.

The parties, which have governments in five states, also backed the position taken by state finance ministers that the cap should not be mentioned in the Constitution Amendment, contradicting the Congress' stand on the cap.

However, according to sources, Jaitley did not give any indication on whether the bill will be taken up in Parliament next week. The Monsoon Session ends on August 12.

"With GST, state governments will lose right to raise revenue. State governments cannot impose sales tax, surcharge or cess in case of a natural disaster and so they will not be able to raise resources... It will reduce state governments to come to the Centre with a begging bowl," CPM general secretary Sitaram Yechury told reporters.

He said the parties were of the view that this was not in the spirit of federalism and this had been conveyed to the finance minister. While the Left is not opposing GST, it is concerned about its fallout on Centre-state relations.

The parties also demanded that the Centre make available a copy of the resolution adopted at the meeting of finance ministers on GST on Tuesday.

With the 60-member Congress on board, the government can ensure a smooth passage of the Constitution amendment bill in the 243-member Rajya Sabha, where the ruling NDA is in a minority. The government, which requires two-thirds backing for passage of the bill, had been indicating that it was striving for consensus.

Yechury described it as a game between BJP and Congress saying the other parties were "immaterial in terms of numbers". He also asked why the government was not convening an all-party meeting to discuss the bill.