Moving towards GST – constitutional amendment a vital step

The Modi government had got a thumping majority and came into power in May 2014. Since then it has been on a relentless pursuit to bring reforms and take India on course to growth and development. One of the major reforms that it tabled in the parliament was the 122nd constitutional amendment bill or the Goods and Services Tax bill. The bill was passed by the Lok Sabha in May 2015, a year after the Modi government had assumed power. However, the opposition which was the calling the shots in the Rajya Sabha stalled the bill.

In the past one year, the government has been moving closer to its goal of getting the GST bill passed in the Rajya Sabha. As the first step, they tried to woo the Congress which was the single largest party in opposition. Congress came out with a set of demands to which it is still holding on till date. The eminent personalities in Congress have been in support of the GST bill individually as it was their baby when they were in power. However, as a party, they ensured that the monsoon session in 2015 was a washout and carried on with the same intention into the other sessions of the parliament in the year.

The Subramanian panel report that was tabled in Parliament in Dec 2015 during the winter session of parliament was another attempt to address the issues contested by Congress. The panel recommendations included three GST rates to have a standard rate, a low rate for essential commodities and a high rate for sin goods. This was a counter move against the Congress demand of capping the maximum GST rate at 18%, by suggesting a high rate of 40% for sin goods like cigarettes, paan masala etc. The panel recommendations of doing away with the additional 1% tax on inter-state sales and bringing the alcohol and petroleum products under the GST scope were in line with the Congress demands. Despite all this, the Congress was in no mood to relent.

In Jun this year, the support for the GST bill was evident in the empowered committee meeting where the finance ministers of 22 states had gathered. Except for a few reservations expressed on GST from Tamil Nadu, the states were in support of the GST bill. With BJP gaining in strength in the Rajya Sabha with the Assam state election results in their favour, they took the right step to collaborate with the state regional parties having representation in the Rajya Sabha. This is another strategic step to get to the two-thirds majority in the Rajya Sabha in support of the bill.

The intent of the BJP government to inch closer to its goal of getting the GST bill passed is clear from its action in this week of July 2016. The cabinet chaired by Narendra Modi approved the dropping of 1% additional manufacturing tax and also provided the guarantee to compensate states for any revenue loss in the first five years of GST rollout. This step is in line with the recommendations of the empowered committee of the state finance ministers that met recently.

This strategic step by step approach by the government has raised the hopes in the minds of the people of the country that the GST bill passage may be through in the current session of Parliament that ends on 12th of August.

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