PROBABILITY OF PASSAGE OF BILL IN MONSOON SESSION OF PARLIAMENT

GST Update 28.07.2016

GST DAILY DOSE OF UPDATION:-

PROBABILITY OF PASSAGE OF BILL IN MONSOON SESSION OF PARLIAMENT

The Union Cabinet on 27.08.2016 has approved amendments to Constitutional amendment bill in order to make the proposed revolutionary taxation reform, i.e., GST, a reality. It is expected that the Constitutional Amendment Bill will be taken up in the Rajya Sabha in the upcoming week and it is hoped that the Constitutional Bill will be passed in this monsoon session of the Parliament.

The new Constitution (One Hundred And Twenty Second Amendment) Bill, 2014 was introduced in the lower house of the Parliament, i.e., Lok Sabha on 19.12.2014 and the bill was taken for discussion and was finally passed on 06.05.2015 as the NDA had majority. However, in the upper house of the Parliament, i.e., in Rajya Sabha, the Constitutional Amendment Bill is stuck there for passage. The four main hinderances for its successful passage are scrapping 1% additional tax, compensation mechanism, specifying GST rate in the Constitutional bill itself and creation of Dispute Resolution Mechanism.

It is being reported that the government has accepted a key demand of Congress to remove 1% Additional Tax on inter-state transactions. It is reported that the mechanism for compensating the States for loss of revenue for five years has been incorporated in the Bill wherein Centre will give 100% compensation to States for first three years, 75% and 50% for the next two years.

However, no consensus has been achieved for specifying GST rate in the Constitutional Bill and it appears that the Bill would not incorporate the cap of GST rate. Furthermore, the demand for setting up a Supreme Court judge-headed dispute resolution body is also not accepted by the government. It is proposed that dispute between Centre and States will be resolved by the GST Council which will be represented by members from both Centre and State.

Well, it appears that half of the problems have been resolved while half of them still persist. It is hoped that the rejection of demand regarding mention of GST rate in the Constitutional Bill and creation of Dispute Resolution Body will not become an obstacle in the passage of the much awaited unified taxation regime.

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GST Update 28.07.2016

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