Jaitley tables GST Bill; 'Not flawless, but has our support,' says Cong

New Delhi: Finance Minister Arun Jaitley, speaking on the GST bill in Parliament on Monday, said majority of political parties have backed the legislation.

"Centre has addressed concerns of all states on GST," said Jaitley in Lok Sabha while moving the Constitution Amendment Bill.

"GST will ensure one tax in the entire country. It will result in seamless transfer of goods and services in the country...This is a major indirect tax reform which will in long run will be in interest of the country," he said, adding Centre has addressed concerns of all the states.

As regards the issue of states giving up sovereign power to levy taxes, the minister said it is not the case, "states and the Centre will be pooling in their sovereignty together and creating a new mechanism which will take all its decision within that pooled sovereignty."

Appreciating political parties for showing unanimity in passing the bill in the Upper House, he said, "it is an important legislation and divided Parliament passing the country would not benefit the country."

The Minister further said the new tax regime will "check leakages, increase tax base for centre and states, eliminate cascading effect of tax on tax, reduce tax evasion and improve ease of doing business."

Jaitley, while moving the amendments to the GST bill cleared last week by the Rajya Sabha, said the Constitutional Amendment Bill is an enabling law. After it is approved by the state assemblies, three more laws-- Central GST, Integrated GST and State GST-- will be drafted by the GST Council.

While the CGST and IGST will have to passed by Parliament, states will have to pass their SGST law.

"Simultaneously the GST Council will work on the functional modalities for implementation such that same person is not assessed by both Centre and states," Jaitley said.

He said it was the strength of the democracy that the states and opposition parties came on board for passage for the indirect tax reform bill.

"Majority of the political parties have come forward in support of the bill. Since it will be implemented by both the Centre and states, it was necessary to build a consensus on it," the Finance Minister said.

Recalling the history of GST, he said in 2003 the Kelkar committee had suggested that structural changes should be brought about in the indirect tax regime.

After the NDA government came to power in 2014, it started discussions with the states with regard to their concerns on compensation, he said.

While the GST Bill, 2011, did not have a provision for compensation, the NDA government initially provided for compensation to the states fully for 3 years and then for staggered compensation for 2 years.

Since states still had concerns regarding compensation, Jaitley said the Centre decided to fully compensate the states for 5 years.

The GST bill, 2011 said that all decisions of the GST Council will be based on consensus but it did not specify what would consensus mean, Jaitley noted.

Upon the recommendations of the Standing Committee, it was decided that every decision of the GST Council should be passed by three-fourth majority, he added.

The states would have two-third voting right in the GST Council, while the Centre would have one-third vote and hence both Centre and states have to agree to pass a decision.

Responding, Congress leader Veerappa Moily said that the bill 'is not flawless, but has our support'.

"(It is) too early to say whether GST is a game-changer. Gains will depend on architecture, engineering, management aspects of the new levy," he added.

“If there was political consensus, this law would've come into force long ago. But this House is being treated like a junior party. The Rajya Sabha is given more importance. But we support the bill,” Moily said.

Warning of the challenges ahead, the Congress leader indicated that the stakeholders' reaction to the bill has to be carefully tackled by the GST Council. He said the Council would also have to allay the concerns of states and Union Territories.

GST, the biggest economic reform since 1991, is likely to sail through smoothly in the Lower House. It will replace a raft of different state and local taxes with a single unified value added tax system to turn the country into world's biggest single market.

The Bill was passed by Lok Sabha last year and now it has to go back to the Lower House for incorporating the amendments approved by Rajya Sabha.

Congress leader Jyotiraditya Scindia on Sunday said the party will support GST Constitutional Amendment Bill and has issued whip to all its MPs to be present in the House on Monday where it is scheduled to be taken up for passage.

Aiming for early implementation of the Goods and Services Tax (GST), senior Union ministers have spoken to chief ministers of NDA-ruled states to ensure that the constitutional amendment is ratified by state assemblies at the earliest.

The chief ministers have assured that, if required, they will call a special session for the passage of the Bill in their state assemblies.

The GST Bill has to be ratified by at least 16 states in 30 days after it is passed by Parliament.

After facing fierce opposition over the Bill for almost a year, the government succeeded in bringing all major opposition parties, including Congress, on board and it was passed in the Upper House with an overwhelming majority on August 3.

The Constitution (122nd Amendment) Bill, 2014, that would lay the ground for roll out of GST regime, was passed by the opposition-dominated Upper House after the government moved four amendments.

Once implemented, GST will subsume various taxes, including excise, services tax, octroi and other levies, and the proceeds will be shared between the Centre and the states.

Under the new GST regime goods would be taxed at the point of consumption, instead of the goods being taxed multiple times at different rates.

The GST, which was first proposed a decade back, is seen as potentially transformative for India's economy, adding as much as 2 percentage points to the GDP while also improving the ease of doing business and encourage investment in manufacturing.

It is also expected to result in greater tax compliance, boosting government revenues.