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The political tug-of-war over the Constitution Amendment Bill for the Goods and Services Tax regime, which secured Cabinet approval on Wednesday, will now shift to the Rajya Sabha, with the BJP taking a calculated risk to push it through.
Hectic negotiations and strategising are already under way among political parties, after the Cabinet approved the amendments to the proposed legislation, incorporated on Tuesday in consultation with the Empowered Committee of State Finance Ministers.
Though there was no official word, knowledgeable official sources said the amendments approved by the Cabinet include the scrapping of the 1 per cent tax on inter-State supply of goods and a guarantee to the States that any revenue loss arising from the implementation of GST would be compensated for five years.
The withdrawal of the 1 per cent tax on inter-State supply of goods was one of the three demands made by the main Opposition, the Congress. While the tax was introduced to help compensate manufacturing States for revenue losses, the Congress had pointed out that it would distort the tax structure under the GST.
However, the other critical demand of the Congress –– to cap the GST rate at 18 per cent in the Constitution Amendment Bill –– which was dismissed by the BJP-led government at the Centre, was also rejected by the State Finance Ministers at their meeting on Tuesday.
With a target of implementing GST from April 1, 2017, the fresh amendments will now pave the way for a discussion and passage of the Bill in the Rajya Sabha in the ongoing Monsoon Session. But the battle is far from over.
A senior Parliamentarian told BusinessLine that henceforth, it would be all about floor management. “The push will be to see that every single Member of Parliament is present when the Bill is taken up… The possibility of a whip being issued cannot be ruled out.”
On its part, the BJP is working out various permutations and combinations to ensure that the Bill sails through. Finance Minister Arun Jaitley, who is also seen as the key negotiator, is expected to hold discussions with political parities.
The government has also been in discussions with the Congress to secure its support for the Bill. The BJP requires the support of 154 members in the 245-member Rajya Sabha to get the Constitution Amendment Bill passed. At present, it has 54 members, while the NDA (of which it is a part) has about 72 members in all. The Congress, the single-largest party in the Rajya Sabha, has 60 members. If the BJP is able to garner the support of regional parties, including the AIADMK, the DMK, the SP, the BSP, the RJD, the CPI (M) and the Biju Janata Dal as well as at least five independent and five nominated Members, it may have enough votes to get the Bill passed in the Rajya Sabha. However, the AIADMK’s stance as of now is not clear.
The GST regime, when implemented, will morph all 29 States into a single market and subsume a number of indirect levies at the Centre and the State levels, including the central excise duty, service tax and value-added tax. It is expected to boost the economy, improve tax collections and promote ease of doing business.
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