| GST Bill passed in Lok Sabha; govt upbeat on prospects in Rajya Sabha |
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New Delhi, 6 May After the Lok Sabha cleared the Goods and Services Tax ( GST) Bill on Wednesday, all eyes are on the Rajya Sabha which poses the real test because the government does not have a majority there. The Bill is likely to come up in the upper House on Thursday. Because of an intense outreach effort by the government, there are good chances that it will clear the Rajya Sabha as well. Parliamentary managers of the ruling coalition have taken heart from the fact that the principal opposition Congress did not oppose the Bill but merely walked out, enabling the government, with its majority in the lower House and with help from alliance partners, to meet the two conditions to pass a Constitution amendment Bill — that at least half the members of the House must be present and two- thirds of those should vote for the Bill. The government will need all the allies it can get in the Rajya Sabha, where it does not have the numbers. Parties such as the Biju Janata Dal ( BJD) and the Samajwadi Party ( SP) which moved amendments seeming to oppose the Bill withdrew them bowing to the Lok Sabha's reality: unquestionable majority of the government. Whether they will do the same in the Rajya Sabha where it is possible to embarrass the government is uncertain. Parliamentary Affairs Minister Venkaiah Naidu told reporters that he had spoken to Leader of the Opposition in the Rajya Sabha, Ghulam Nabi Azad, who in turn had promised to speak to Congress President Sonia Gandhi. Naidu said the government was in touch with all those who had proposed amendments to the Bill and later withdrawn them — like the BJD— to address their reservations. The government also reached out in other ways. The real estate Bill was referred to a select committee of the Rajya Sabha, bowing to an Opposition demand in a give- and- take negotiation. Naidu stressed, both inside and outside the House, how the treasury benches accorded Congress President Sonia Gandhi due respect when she attacked the government over its failure to fill important posts in the Central Vigilance Commission and Lokpal. At current reckoning, only the Congress and the All India Anna Dravida Munnetra Kazhagam ( AIADMK) are opposing the Bill and seeking reference to a parliamentary committee. Turn to Page 20 > ECONOMY 4> >GST rates likely to be in the range of 20- 23% >' Some heavy lifting ahead for govt' HOUSE MATHS —The GST Bill will have a tenuous fate in the Rajya Sabha if the Congress and AIADMK vote against it —But a walkout by the Congress, as it did in the Lok Sabha, will ensure a smooth passage HERE'S HOW: A minimum of more than half the total strength of the House should vote for a constitutional amendment. Of this, two- thirds should vote in favour of the Bill RS TOTAL STRENGTH CURRENT STRENGTH FOR THE BILL OTHERS LIKELY TO VOTE FOR THE BILL MIGHT WALK OUT/ VOTE AGAINST 245 244 82 76 86 244 244 244 (halfway mark 123) (one vacancy) (NDA 61, PDP 2, BPF 1, Ind. and others 7, Nominated 10, TRS 1) (Trinamool 12, BJD 7, Janata Parivar 30, BSP 10, Left parties 11, NCP 6) (Congress 68, AIADMK 11, DMK 4, IUML 1, JMM 1, Kerala Congress 1) |Together, parties that may vote for the Bill account for 158 MPs |If all 244 vote, the two- third figure would come to 163 |The Bill, therefore, will fall if Congress and its allies along with DMK and AIADMK vote against it. However, a walkout by the Congress would bring the effective strength of the House down to ( 244- 68) 176. Two thirds of this will be 118, a number the government is confident it can muster in favour of the Bill Source: Party positions from the Rajya Sabha website |
| GST rates likely to be in the range of 20- 23% |
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New Delhi, 6 May The proposed national goods and services tax ( GST) rates could be 20- 23 per cent, if recommendations of the National Institute of Public Finance and Policy ( NIPFP) are accepted by the Centre and states. Sources said NIPFP is going to recommend this range to the Empowered Committee ( EC) of State Finance Ministers. The panel meets in Thiruvananthapuram on Thursday and this item might be discussed, though the report has not been given yet. The meet will also take up the issue of compensation to states and an information technology ' backbone' for the GST, termed GST- Network. In the Lok Sabha, on the GST amendment Bill, Finance Minister Arun Jaitley said the rates would be much below the 27 per cent recommended by a sub- panel of the EC. " I straightaway concede that 27 per cent would be very high... after this 27 per cent (revenue- neutral rate or RNR, at which no revenue loss to states is likely on adoption of GST) was born, the states and the Centre have decided to keep alcohol out," he said. Adding that both had the same view on this. "We have decided to keep petroleum out and no state is interested in imposing higher taxes on its people and neither the central government. Therefore, this ( RNR) figure is going to be much more diluted compared to the figure ( 27 per cent) mentioned," he said. He said the 13th Finance Commission had suggested 18 per cent as a possible figure. However, it had also suggested adifferent model of GST compared to what is being considered now. Currently, the Union excise duty rate is 12 per cent on most goods, while value- added tax (VAT) is 12.5 per cent in most states. This combines to 24.5 per cent. Then, there are purchase taxes in some states and acentral sales tax of two per cent on inter- state movement of goods. From this point of view, a goods tax at 27 per cent seems too high, given that VAT also gives input credit and so does excise duty in most cases. Service tax will, however, be 14 per cent from June and making it 27 per cent would again be too high a rate. Currently, only the Centre can impose service tax. On the 27 per cent RNR recommended earlier by a EC panel, the state GST ( SGST) component was recommended at 13.91 per cent and central GST at 12.77 per cent. The committee had also proposed a narrow band for the SGST component. The recommendations were referred by the EC to NIPFP, since it was based on revenue collection figures of 2011- 12. Prashant Deshpande, Senior Director, Deloitte in India, said 27 per cent GST rate would be a non- starter. " The rate should address the issue of all — industry, states and consumers," Deshpande said. GST rates are not part of the constitutional amendment Bill. It would be decided later by the proposed GST Council, comprising the Union and state finance ministers. The Bill also tries to allay the concerns of manufacturing states. It seeks to impose a one per cent origin tax, to be given to these states. However, there are concerns that this tax will have a cascade effect and, hence, work against the overall theme of a GST. Jaitley assured the Lok Sabha that this was being worked out, to ensure this did not happen. NIPFP working on this and Jaitley tells Lok Sabha 27% is too high; also says will be ensuring against cascade effect of origin tax; finance ministers panel meets today STATES — ON GOODS State levies value- added tax on goods — 4% at lower end, 12.5% at higher end ( some states have also breached this limit) There is an input credit given to the user of these inputs For inter- state movement of goods, the state from where the goods move, get 2% tax Some states impose entry tax such as purchase tax STATES — ON SERVICES States do not have power to impose service tax, barring some say on entertainment Centre — Goods Imposes excise duty on manufacturing, which is generally 12%, but there is a huge range Gives cenvat credit, which is like an input credit Imposes customs duty on import of goods Centre — Services Imposes 14% tax on services, except a narrow negative list PROPOSED GOODS AND SERVICES TAX States — goods tax States will impose goods tax from manufacturing to sales States where goods are sold will get tax Manufacturing state will get 1% tax for 2 years All entry- level taxes would be subsumed CST will be subsumed States — Services States will impose service tax as well Place of service rules will be worked out to clarify which states will get tax Centre — goods Centre will impose goods tax, from sales to manufacturing Customs duty will remain with the Centre INTEGRATED GST It would be imposed on inter- state supply of goods and services Will be collected by the Centre and given to the consuming states TAX REGIME The current indirect tax regime GOODS AND SERVICES TAX |
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