GST moves forward as Cabinet clears Constitutional Amendment Bill

The introduction of goods and services tax (GST) system has moved a step forward, with the Union Cabinet on Tuesday giving its nod for introduction of a Constitutional Amendment Bill in Parliament.

A constitutional amendment is required to introduce a dual GST system in the country. The proposed Bill will, among other things, empower the Centre to tax goods at the point of sale. Currently, the Centre can levy tax only at the manufacturing stage and not at the point of retail sale. The Bill will also empower States levy tax on services.

The Union Cabinet has cleared the fourth and final draft of the Constitutional Amendment Bill today, official sources said. All the previous three drafts were opposed by State Governments citing autonomy issues.

Bill likely this session

Indications are that the Constitutional Amendment Bill, which is likely to be introduced in the ongoing Budget session, will specify that the GST Council for taking decisions on all important matters would be formed through a Presidential order. Also, the composition of the GST Dispute Resolution Authority will be decided by Parliament.

Last year, a draft of the Constitutional Amendment Bill had suggested that a GST Council Chaired by the Union Finance Minister with States as members would be formed to decide on changes in GST rates. However, many States were opposed to special powers being conferred on the Union Finance Minister to veto matters on State GST.

The subsequent second and third draft also did not meet the approval of many State Governments, especially the BJP-ruled States, that feared loss of fiscal autonomy.

krsrivats@thehindu.co.in

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