New Delhi: Congress on Wednesday made it clear to the government that firm assurances for keeping the GST rate capped at 18 per cent and bringing subsequent legislations needed for its rollout as financial bills alone could ensure its support to the long-pending Constitution Amendment bill.
Former Finance Minister P Chidambaram virtually laid down these conditions hours before the bill is to come up for passage in the Upper House.
At the AICC briefing, Chidambaram who is also a senior party spokesman, evaded a direct reply to a query on whether bringing the subsequent legislations, Central GST (CGST) and Integrated GST (IGST)-- as financial bills was a new condition put forth by the Congress before it backs the legislation.
"We also demanded an assurance that the CGST and IGST should not be moved as money bill. The CGST and IGST are bills which will apply on taxpayers, on common man. They must be debated and voted upon by both Houses of Parliament. We hope to get assurance from the Finance Minister. If these assurances are forthcoming, we will be able to support," Chidambaram said.
Noting that the report of the Chief Economic Advisor Arvind Subramanian was a "solid economic document," he said it has suggested that a revenue neutral rate should be between 15 and 15.5 per cent and the standard rate should be 18 per cent.
Replying to a volley of questions, he insisted that there has been a broad consensus among opposition parties that the standard rate of 18 per cent would be an "appropriate rate", it would be non-inflationary, it would be "something that could be sold to the people of India and it would be something that would not lead to tax evasion."
"We think at the end of the debate, we will be able to support the bill. But before the debate ends, the Finance Minister answer some of the questions raised by the opposition parties including mine and will also give the assurances that we demanded", he said.
Making a strong pitch for tax rate to be mentioned in the GST law, he said if it not there, then "it is like enacting Hamlet without the Prince of Denmark".
"No tax law will be upheld by any court without a tax rate," he said, adding that because of the views expressed by state Finance Ministers and because "we recognise that at this stage it will be difficult for the government to mention a rate in the Constitution Amendment bill, we have deferred the demand."
At the same time, he said Congress has made it clear that the government needed to mention the rate in the subsequent legislations.
Congress had been at loggerheads with the government for the past over a year on the GST bill on three counts--a cap on the rate in the Constitution Amendment bill, removal of one per cent additional tax to be levied by manufacturing states and a Supreme Court judge-headed panel to resolve disputes in the new taxation regime.
