New Delhi: Opposition parties in the Rajya Sabha toned down on Wednesday their criticism of the proposed goods and services tax (GST) framework on Thursday and looked set to support the four key bills laying the foundation for the singular tax reform. The Lok Sabha cleared the legislation a week ago.
Opposition parties, especially the Congress, adopted a conciliatory approach as the biggest tax reform in independent India reached the last mile before it is sent to the President for his signature. Once rolled out, GST will transform 29 states and three union territories into a single, seamless market administered by a council that derives authority from the pooled sovereignty of central and state governments.
“I congratulate Mr Arun Jaitley (finance minister) and the government for being in power when the bills are passed. It is not a perfect GST. In a political economy, it is difficult and undesirable to have one tax rate. This is a moment for collective celebration," said senior Congress leader Jairam Ramesh. Ramesh said he was not moving any amendments to the bills.
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The four bills forming the cornerstones of the GST regime—the Central GST Bill, the Integrated GST Bill, the GST (Compensation to States) Bill and the Union Territory GST Bill—were passed in Lok Sabha on 29 March.
The Congress sought a road map for having fewer tax rates under GST and for inclusion of the commodities which are at present excluded such as five petroleum products, real estate, electricity and liquor. Crude oil, natural gas, aviation fuel, diesel and petrol are kept out of GST initially, but the council will decide when to bring these into the GST’s ambit.
Congress member Anand Sharma described the exclusion of these items from GST as “worrisome" as states will have different tax rates on these items. He also urged finance minister Arun Jaitley to address a possible rise in inflation on account of tax rate on services possibly going up to 18% in the GST regime, up from 15% now.
“Electricity, which is vital for the core sectors of the economy, has been kept out. Energy intensity is very high in the core sector, up to 33%. Also, real estate has been kept out. When you are fighting black money, why real estate should not come in? So is alcohol. We understand the constraints. When you keep 40% of revenue outside GST, it will make tax rates very high. In developed countries, GST rate is less than 17%," said Sharma.
Congress leader from Madhya Pradesh, Digvijay Singh, said having five rates—5%, 12%, 18%, 28% and 28%—plus cess could cause hardship for traders. Bhupender Yadav, a Bharatiya Janata Party (BJP) MP from Rajasthan, said having a single tax rate was not possible for a country of immense income disparities.
Earlier in the day, BJP’s Subramanian Swamy suggested that the non-government shareholding in Goods and Services Tax Network, a not-for-profit private limited company set up to provide IT infrastructure and services for tax payers and governments, be limited to public sector banks. As of now, 51% is with non-government financial institutions. Swamy sought the change as GSTN, a repository of taxpayer data, cannot reportedly be audited by the Comptroller and Auditor General of India.