GST debate live: Lok Sabha passes supplementary bills
21 min read 29 Mar 2017, 12:26 PM ISTFinance minister Arun Jaitley on Wednesday introduced the four supporting legislations to the goods and services tax (GST) bill in Lok Sabha. Here are the latest updates
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New Delhi: The revised draft of the goods and services tax (GST) legislation tabled in Parliament on Monday by Finance Minister Arun Jaitley. Here are the latest updates from the debate in the Lok Sabha:
9.25 pm: Prime Minister Narendra Modi hails passage of GST supplementary bills by the Lok Sabha; says “New Year, New Law, New Bharat’
8:54 pm: Lok Sabha approves GST Compensation Bill and UT-GST Bill.
8:40 PM: Lok Sabha approves CGST and IGST bills
8:23 PM: Bill up to vote, amendments voted upon,
8:21 PM: Jaitley requests house to pass the bill
8:12 PM: The council is a permeant body and is represented by every state government. it has a political complexion which accommodates everyone and it has been our effort to make sure that all decisions are taken by consensus and that is why these drafts have been prepared unanimously, says Jaitley
8:11 PM: As far as the rates are concerned, rates are recommended, the central government only notifies them, does not decide them. under clause 166, all rules and regulations that are to be framed are raised before parliament and thus there is the question of parliament control. J&K is out of it, they will have to make their own separate act so that their manufacturers and consumers get advantages.
8:06 PM: Agricultural production is to be zero rated, where is the confusion says Jaitley in response to questions by the oppositions. Are you presuming that 29 states all have conspired to harass a particular section? Don’t read into a provision something which doesn’t exist.
8:04 PM: CAG at one stage was of the view that power vested with him must be mentioned here. CAG’s authority comes from the constitution and the provisions of the CAG act and not from the taxation law. So we don’t have to empower the CAG seperately.
8:02 PM: Mr Mahtab of BJD raised a question about IGST, the view of the revenue service was that as far as the IGST law is concerned it has to be entirely centrally administered. the reasoning they gave was from the language of the constitution itself, as also the fact that if there is a debate between two states, the centre is empowered to delegate it to one of the states. Where there are complicates and conflict of interest, those cases will be adjudicated by the centre. and that is the reason why we decided to share the authority and many regional parties were particualr on the sharing of this power and did not want ti to rest entirely with the centre.
7:59 PM: In whatever decisions there is consensus, we take the decision. But where it is contested, we have not resorted to vote. Like VAT we feel the states will agree.
7:56 PM: There is tax evasion in real estate and there should be an attempt to bring it under GST says Jaitley. States had a concern about their revenue vis a vis stamp duty. Council has now decided that let GST be implemented and in one year a decision will be taken. With regard to petroleum products and consumable alcohol, states said that these were a big source of revenue and we cant agree to this. After discussions we persuaded states that we will not touch alcohol but let us bring petroleum under GST but it will be taxed if the council agrees. Today petroleum is under GST but a decision will be taken once GST is underway.
7:54 PM: Competition law will come in if there is abuse of dominance and a condition created for market dominance.
7:52 PM: Some members were uncomfortable with the anti profiteering clause. The clause says that no one should have an unjust advantage because of tax rebates. This rebate should be passed onto the consumer and it is this that is there in the anti-profiteering clause says Jaitley.
7:47 PM: All health products which were taxed at 40 per cent and more will be taxed at 28 per cent says Jaitley. Says that earlier manufacturing and producing states were dissenting. During the UPA there was no compensation package and that was a deal breaker. We have brought a compensation package.
7:40 PM: On the issue of multiple rates, Jaitley says different commodities need different rates, like the ones used by the poor, on which states impose very little taxes. You can’t have similar taxes on BMW car and slipper or baby food. What economic class uses what commodity, that will determine the kind of rate imposed. For one commodity, there will be one rate. For different commodities, having the same rate will be regressive. As far as taxes which are being subsumed in the GST, cesses will also get subsumed. We have kept a cess for the compensation. Out of all taxes which come to the government of India, 42% goes to the states. For GST, half goes to the states.
7:39 PM: The consequence of not doing so, with all the state governments, once you arrive at a federal arrangement then the Centre has to lead by example in following that arrangement. If one of the contracting parties says I will unilaterally exit, will not work. Deviations at this early stage will be highly inappropriate and ill advised.
7:35 PM: Moily interjects, asks who gave the power to GST Council to make these changes? Jaitley responds: Answer is very simple – the GST Council has been given the power to make a recommendation with regard to the model law. Who gave that power, the Constitution amendment gave that power. This Parliament and state assemblies get the power to frame those laws. Plenary power to frame legislation is with Parliament and state assemblies. While framing that law, we have to be guided by those federal considerations which have prompted us to go through with the GST.
Ordinary recommendations of GST Council have to be acted upon. If not, and if all assemblies choose to bring their own changes, then implementation becomes difficult.
7:32 PM: The easiest way of bringing anarchy is to say that once the GST Council comes up with a rate, the 32 legislatures will say let’s change. Congress opposes Jaitley’s statement that there’s no disparity because Congress leaders agreed to the GST council’s powers.
7:28 PM : Jaitley: The recommendation of the law and the rates will come from the (GST) council. The very fact that you have decided by virtue of the Constitutional Amendment, let us not rake up these created controversies. Constitution says tax must be backed by law. The law says central government will come up with the CGST and state governments will have the SGSTs. So this is the law.
7:24 PM: Jaitley responds to Moily and Salim: This is the basic answer to the doubts you raised, the Constitution of India clearly divided the powers between the Centre and the States. You have Central jurisdiction - Central List, State jurisdiction – State List and the Concurrent List. GST idea created a grey area – you will have a tax jointly imposed by the Centre and States, who will merge their taxes. Entry tax, and smaller taxes etc will all go. An expert committee has been appointed to enable free flow of business and taxes. You are right that Parliament has plenary powers; so do the state assemblies. We have created India’s first federal decision making authority
7:22 PM: Jaitley responds: Object of GST when conceived was to have one tax with interface with one assessing officer. The idea was to have most of the assessments must be self assessment except some limited audit cases. The goal was to make the whole country one market.
7:19 PM: Jatiley responds to the debate on the Bill. “This Bill once it becomes an Act and is implemented will have a signicant impact on the taxation system in India," he says. Anybody engaged in economic activity, if manufacture pay excise duty to centre, for service, service tax to the centre, VAT to states. The interface of each person doing economic activity is with multiple assessing officers.The nature of economic activity is changing. The nature of taxes are also converging," Jaitley says.
7:17 PM: Govt should come forward and rectify issues, only then law will become fruitful, says Venugopal
7:13 PM: K C Venugopal from Congress takes over, criticises the GST bill for bypassing the Parliament, reiterates Moily’s comments from earlier in the day. Talks about the Finance Bill where 33 laws amendment. Powers of the Parliament are being given to the GST Council, he says.
7:10 PM: Birla of BJP draws laughter from the House as he says “Speaker, you know more than anyone else that in the country, there were second hand transactions (illegitimate transactions)". He concludes.
7:05 PM: Om Birla of the BJP praising the government’s attempts to reduce black money, corruption and terrorism, including the reforms under GST. Reducing cash transactions and moving towards digital will lead to less “tax chori", he says. After independence, different taxes were imposed by state governments. Today, through GST, one market will be created and will lead to lesser prices, Birla adds.
6: 43: Ravindra Kumar Rai, BJP MP says refunds under GST should be kept minimum.
6:36: Kothapalli Geetha, YSR Congress Party MP raises concerns about whether present government machinery is efficient enough to implement GST and whether people have been educated enough about GST. She advises government to give enough time to the industry to prepare for implementing GST.
6:30: Murali Mohan Maganti, TDP MP says Andhra Pradesh i set to lose ₹ 4700 crore per annum and ₹ 23500 crore in five years after GST is implemented. Centre should say how it will compensate revenue deficit states like AP.
6:25: Rajendra Agarrwal, BJP’s Meerat (Uttar Pradesh) MP takes over. Claims lack of commitment from Congress to pass the bill during its tenure.
6.23: Rahul Shewale of Shiv Sena takes over. Says, Maharashtra, being a manufacturing state, stands to lose revenue and compensation from the central government is key in carrying out developmental work in the state. Demands that revenue loss of local bodies should be compensated directly rather than through the states.
5.30pm: N.K. Premachandran of Revolutionary Socialist Party: Delegation of taxation powers of Centre and states to the GST Council amounts to sacrificing of a basic feature of the Constitution.
5.25pm: Rajeev Shankarrao Satav of Congress: The proposed GST structure does not seem to favour ‘one nation. one tax idea’ as different tax rates are proposed.
5.20pm: Saugata Roy of Trinamool Congress: European Union is moving away from the idea of a single market as indicated by Britain’s proposed exit from the EU. In this context, one cannot predict what view Indian states may take in future about the idea of a single market. There is not sufficient preparation in many areas of GST implementation including identifying of tax rates of individual commodities. A single market is a good idea, but GST principle is facing problems in Malaysia and Australia. Nothing wrong in waiting a bit longer to get fully prepared before rolling out GST.
5.15pm: Santosh Kumar: Our leader has supported GST from the start but the bill should have a provision for poorer states like Bihar. Some twenty indirect taxes have been subsumed by GST. The movement of trucks which would be slowed down due to taxes will also be impacted. After implementation of GST, all of this will change along with tax-chori. Even GDP is expected to jump by 1 to 2%.
5.10pm: Santosh Kumar of JD (U) from Bihar takes over.
5.05pm: Raman Deka is in the Speaker Chair now
5.00pm: Maadam: 65% of our country’s population is under 35 years and this is our biggest strength. We have not just spoken about co-operative federalism, we have empowered states. Due to GST, ease of doing business and the schemes that have been launched, will be enabled. None of our schemes are paper schemes like we have seen in the past.
Our manufacturers have always said they have never been able to compete with foreign goods because of overheads and that was making us an import oriented economy. Because of GST, in the coming days, the end product we prepare will be internationally competitive.
4.55pm: Poonamben Hemantbhai Maadam of BJP Jamnagar: The opposition has been unable to speak in one united voice against the bill
4.50pm: Sirajuddin Ajmal of AIUDF: GST will reduce cost of doing business, thus ensuring fairer prices for common people. Government needs to work on various levels for successful reforms. Good IT infrastructure is needed for successful implementation of GST. Government needs to work on that. Special attention ought to have been given for developing trade and industry which leads to employment growth in North Eastern states
4.45pm: Suresh C Angadi: GST will help government in realization of objective of one tax, one nation, one market says Suresh C Angadi. GST is expected to boost GDP growth by 2%. GST will lead to less tax evasion
4.40pm: Rashtriya Lok Samta Party’s Ram Kumar Sharma Kushwaha : Petroleum should be brought into GST, so should be other sectors.
4.35pm: BJP’s Subhash Chandra Baheria: Clothing should be kept under lower tax bracket.
4.30pm: Shiromani Akali Dal’s Prem Singh Chandumajra: GST will stop tax leakage. Its an important tax reform of the government but the government will have to see that the taxpayer doesn’t suffer. Like Chanakya used to say, a king should collect tax as smoothly as the bee takes honey from the flower. Lease of land should not be taxed, many of us give out land for lease and come here. The lease component should not be taxed.
4.25pm: Mahajan: GST is a last mile tax and will bring the whole country under one umbrella taxation. Services will benefit all states and those goods will invariably benefit the whole country. GST will help reduce tax terrorism.
4.20pm: Poonam Mahajan BJP takes over
4.15pm: Sule: In the last five years, Maharashtra has seen a series of droughts. Once GST is implemented it will have to be seen if it will it be good enough to compensate states or not. However, there is no such mention of compensation in the bill.
4.10pm: Supriya Sule (NCP) takes over
4.05pm: Salim: We cannot make the GST council a clone of the parliament
4.00pm: Mohammed Salim, CPI-M, West Bengal takes over.
3.55pm: Reddy: Main benefits of GST include uniformity of tax structure, better control of leakages, increased revenue, faster movement of goods that leads to smaller inventories for traders and manufacturers and increases their profitability. But risk of exemption is a concern. Compliant hospitals will face competitive disadvantage while non-compliant hospitals won’t, thus it is not a level playing field.
Will 4 tax slabs fit all products and commodities? This is in hands of GST council. For instance, coconut oil in Kerala is edible, but in Rajasthan it is hair oil. We cannot compromise on fiscal federalism. We take a leap of faith with trust in our finance minister and prime minister, so many are opposing GST. Not all states growing at 14% but Telengana growing at 16% so we can’t be hammered at 14%. Despite ambiguities we support. It is a new year for Telegus but let it be new era for Indians as well.
3.50pm: K. R. Reddy, TRS takes over.
3.40pm: Galla: Solar industry is sunrise sector but GST will increase the cost of renewable energy by 14-16%. Consider the impact on ‘Make in India’ and solar industry. I want to caution FM that implementation mechanism should match up ever changing business dynamics. With this I support GST.
3.30pm: Galla: IT infrastructure has to be put in place as soon as possible for GST. Suggest that every state has to be equipped to graduate from existing tax structure to GST.
2.55pm: Galla: Andhra Pradesh is reeling under financial crisis after bifurcation. We will lose Rs2,000 crore annually once GST is introduced. IT infrastructure has to be put in place as soon as possible for GST. Suggest that every state has to be equipped to graduate from existing tax structure to GST.
2.50pm: Jayadev Galla of the Telugu Desam Party takes over.
Jayadev Galla: We are introducing GST now so better late than never. Earlier there was a tremendous trust deficit between the centre and states but now states have started trusting Modiji. Benjamin Franklin had said, nothing can said to be certain except death and taxes. Taxes are here to stay, and are inalienable to the growth story of any nation.
2.45pm: Shiv Sena’s Vithoba adds that through central GST each commodity has different slabs and rates. The burden will be diverted to the consumer. This should be kept in mind. Shiv Sena has been given a chance for the fourth time in municipal elections in Mumbai. It is a cosmopolitan city. In such a situation, the corporation has the responsibility to provide 24 hour water, electricity, good roads, hospitals and other welfare activities.
2.40pm: Anandrao Adsul Vithoba from Shiv Sena addresses the house saying that it was necessary to get common consensus in tax. To bring this about, a council was made which needed to have consensus. The council headed by the finance minister also included state finance ministers. This was done in every state as well which has made possible for us to discuss the bill.
Every state makes their own budget because they know what their revenue and expenditure will be. There has been a provision for five years but what happens after that? It should be kept in mind. Our FM will say that it has been done through consensus and states have accepted but it is important to have discussion, Vithoba says.
2.35pm: Another concern is multiple registration for service providers. They would have to take 30 separate registrations’. It will also increase service cost and go against the notion of ‘one nation, one tax’. This also does not to be in the spirit of ease of doing business, says Mahtab.
In a roundabout way, agriculturists are being put to tax. Agriculture is being taxed and is being calculated with other source of income. Four states including Odisha had objected to this provision but was not accepted with the council, Mahtab added.
2.30pm: Mahtab says Odisha had also raised the issue of clean energy cess in the council. It is an energy state. This cess is not shared with the coal bearing states nor did they get any benefits from it. It had been suggested that at least 60% of such funds be shared with the states and 40% go to the GST fund. It is the coal bearing state which should get the benefit. However, the council has decided that the entire amount will be used for compensation.
2:20pm: Biju Janata Dal MP Bhartruhari Mahtab begins his discussion of the GST Bill. Only speaker from his party, he adds. “Do not expect too much from GST. It all depends on revenue neutral rate. It’s uncertain whether revenue will grow after one year," says Mahtab. He draws attention regarding central government’s decision to constitute an authority for antiprofiteering measures. It’s a retrograde step. The Competition Act provides provision against abuse of dominant position. No other law is needed.
Mahtab also discusses entry tax issues. “Our suggestion is that one tax rate of 16% should be imposed. But that has not been accepted," he adds.
2:10pm: Banerjee raises concern about the rate structure, important to give time to industry to prepare. A completely e-based indirect taxation system means that even the smallest player has to be on board. Small businesses have to be given time to adapt to the changes, says Banerjee.
Nobody should say “humne kiya hai", we have to say “sabne kiya hai", Banerjee says while concluding.
2:00pm: Kalyan Banerjee of the All India Trinamool Congress (AITC) starts his discussion of the GST Bills. The compensation act has been designed to ensure no state will suffer because of GST, says Kalyan Banerjee.
1.50pm: TG Venkatesh Babu of AIADMK lists problems of GST for Tamil Nadu: Impact of proposed GST on fiscal autonomy of states, revenue loss for manufacturing states, need to guarantee states for loss incurred through GST, loss of revenue for lower tax rates on goods, issue of dual control, fixing of threshold and exemptions.
1.30pm: Udit Raj:GST will lead to corruption mukt (free) Bharat. GST council is not dictated by central government , it will act as a buffer. Only 20-20 lakh people pay taxes (in direct taxes), GST will boost tax revenue collection. GST ties in with digitisation and also to transparency. Transparency, accountability and growth- that is what GST will do.
1.25pm: Udit Raj: The intent of GST is a uniform tax rate in the country. The government is bring this to simplify the indirect tax regime which will lead to uniformity. It will be beneficial to the 125 crore consumers. It will remove anomalies...With GST transactions going online, it will expand the tax base. Any suggestion that state power will be abrogated is false
1.20pm: BJP MP Udit Raj, a former tax officer, starts speaking on GST.
1.15pm: Intentions may be good but ultimately you are landing this country in area of tax distortion.
1.10pm: Moily: 40% of the tax areas have been left outside. GST debate continues on categorization...There will be total anarchy in the country. Has the government evaluated the cascading effect of IGST on prices? The GST regime has set the cat against the pigeons?...It will be a logistical nightmare.
1.08pm: Moily: When it comes to judicial independence they stand up. Is it not the duty of the judiciary to protect legislative independence? It has to be simplified taxation...How do you calculate the slabs. New definition of agriculture in the GST bill. What was the need for it? It is an anti tax payer regime...There are no safeguards.
1.05pm: Prime Minister Narendra Modi present in the house during the debate on GST.
12.57 pm: Moily: This is not a game changer but only a baby step forward. This will increase the cost of transaction.
12.53 pm: Moily: GST penal provisions far too vague and draconian in nature. High tax rates will be damaging for the industry and the consumers. One nation-one tax is only a myth. There are too many taxes...This itself will defeat the objective of the GST.
12.45pm: Moily: History will reveal what deprivation we are given to the federal structure. You will be happy to have, i wont say brute, but a deep majority. You feel you have the right to ignore the Rajya Sabha...what is the point of council of ministers. If Rajya Sabha members have some pride, they should all resign. There has been no clarity on implementation of provisions.
12.38pm: Congress’s M. Veerappa Moily is the first speaker from the opposition on the issue.
12.37pm: Jaitley: Both states and Centre have pooled in their sovereignty to the GST Council... this is the first such example. It is incumbent on all of us to make sure that this federal institution works. Can there be a situation that 32 different changes and law comes, then GST will become difficult if not impossible to implement. We can give recommendations to the council but its sovereignty has to be respected.
12.28pm: Jaitley: The Council had 29 states, two union territories with legislative assemblies (Delhi and Puducherry), and one centre—this GST Council was empowered to recommend the tax structure, its outline and how the laws should be made around such a taxation regime. A total of 12 meetings were held with each meeting for hours was held by the Council and it gave its recommendations. The Council was empowered to recommended on taxes, cesses and surcharges, the exemptions and model goods and services tax law.
12.24pm: Jaitley: This legislation is landmark because it will allow both Centre and states to work together on a bill... Article 246 (A) states that Parliament as well as state legislatures in every state has the power to apply goods and services tax (GST) and how this power is used so as to make sure that clashes between the two does not happen.
12.21pm: Jaitley: There was a long pending demand that there should be a uniform taxation system. Earlier the centre and states had different set of taxes...to put a unified system in place the empowered committee was working on it for a long time. Both the houses of Parliament passed the bill to bring in GST.
The need for such a legislation was there because the legislative system itself has changed. We have a central list which made laws for centre and a concurrent list which made laws for states.
12.20pm: Finance minister Arun Jaitley makes opening remarks.
12.19pm: Jaitley introducing the four supporting legislations to the GST Bill in Lok Sabha including the central GST bill, the integrated GST bill, the Union territory GST bill and a bill to compensate states for revenue losses arising from the transition to GST. House allows the bill to be taken up for consideration and passage.
12.08pm: Question hour spills over, GST debate running late.
Also read: GST debate in Lok Sabha: Five things to watch for
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