"It must be considered that there is nothing more difficult to
carry out, nor more doubtful of success, nor more dangerous to handle, than to
initiate a new order of things.”
This quote from Machiavelli’s The Prince could hardly
have been more apt than in the case of introducing the Goods and Services Tax
(i.e. GST) in India
News . Even after ten years of its announcement
during the Budget speech of P Chidambaram, Union Finance Minister in 2006, the
GST is yet to see the light of day. The reasons are many. The amendment of the
Constitution is the first requirement for bringing in the Dual GST to be
administered concurrently by the Centre and the 29 plus States.
A quick political history | India News
While the Centre and the States were having
negotiations –from 2006 onwards –Pranab Mukherjee, then Union Finance Minister,
set the ball rolling with the introduction of the 115th Constitution Amendment
Bill in Parliament in March, 2011. Some of the states ruled by the Bharatiya
Janata Party (BJP) opposed the Bill, and eventually with the expiry of the
tenure of the Parliament in May, 2014, the first attempt by the United
Progressive Alliance (UPA) Government failed. With the change of Government in
the General Elections, the National Democratic Alliance (NDA) Government took
over the reins. The new Finance Minister, Arun Jaitley, in his first Budget
Speech in July 2014, made it clear that he would make an all-out effort to
bring in GST at the earliest.
Evaluating three objections in India
News
The Indian National Congress, the primary opposition
party, has raised three major objections with respect to the 122nd Amendment
Bill.
Indeed, one particular provision, which is of 1
percent additional tax on inter-State movement of goods to be retained by the
manufacturing supplying State, is distortionary in many ways. This has been the
first point of objection from the Congress party.
This is on the ground that the GST Council cannot be the judge of
the disputes emanating out of its own directions. This provision of an
independent DSA was there in the 115th Constitution Amendment Bill.
Resolution and battles ahead | India
News
Now, out of the three basic demands of Congress, the
Government seems to be amenable to the first demand of scrapping the 1 percent
additional tax by the manufacturing/supplying State. The second demand of an
independent GST Dispute Settlement Authority can also be taken care of with
suitable modifications in the relevant clause. The good & Breaking news is that the Congress –
the political party which had introduced the GST in 2006, and had carried
through the good work till 2014 in its efforts for political consensus – has
now taken a more conciliatory approach by announcing that it may not insist on
the 18 percent cap in the GST rate in the Constitution, if the Government comes
out with a viable proposal for the legal ‘ring-fencing’ of the GST rate,
outside the Constitution.
This is a sensible suggestion, and it has been welcomed by the
Government. In fact, the ‘ring-fencing’ of the GST rate can be considered in
the provisions relating to the power of the GST Council itself. It was
reassuring that Finance Minister Jaitley and Ananth Kumar, the Parliamentary
Affairs Minister, met Congress leaders Ghulam Nabi Azad and Anand Sharma to
arrive at an agreement for the smooth passage of the GST Bill in the Rajya
Sabha before the Monsoon Session of the Parliament, starting 18th July, 2016.
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