Govt circulates amended GST bill ahead of RS debate tomorrow

Arun JaitleyThe government today circulated certain official amendments to draft goods and services tax (GST) legislation - the Constitution (122nd Amendment) Bill, 2014 - among members of the Rajya Sabha ahead of taking up the GST bill in the upper house tomorrow.

The amendments propose three key changes to the 2014 bill relating to the additional tax of up to 1 per cent, compensation to states, and a dispute resolution by the GST Council.

The amended bill does away with the provision that allows the central government to charge 1 per cent additional tax, called manufacturing tax, on goods sold outside a state.

On compensation to states for loss of revenue, the amended bill states that Parliament shall, by law, provide for compensation to states for any loss of revenues, for a period which may extend to five years.

This would be based on the recommendations of the GST Council. This implies that compensation cannot be provided for more than five years, but Parliament can decide on a shorter period.

The 2014 bill used the term 'may' instead of 'shall'. The select committee had recommended that compensation should be provided for a period of five years. This recommendation has not been fully addressed by the 2016 amendments.

On dispute resolution, the amended bill states that the GST Council shall establish a mechanism to adjudicate any dispute arising out of its recommendations. Disputes can be between: (a) the centre vs one or more states; (b) the centre and states vs. one or more states; (c) state vs state. This implies that there will be a standing mechanism to resolve disputes.

Briefing party members on the bill at a meeting of BJP's parliamentary party in the morning, finance minister Arun Jaitley asked members to read and understand the bill before it is taken up.

Both the BJP and the Congress have already issued a whip to their members making it compulsory for them to be present in the house on Wednesday when debate and vote on the GST bill are expected.

The GST legislation, which is pending in the Rajya Sabha, was passed in the Lok Sabha in May 2015. It was then referred to a select committee of the Rajya Sabha which submitted its report in July 2015.  The passage of the bill will lead to introduction of a uniform goods and services tax across India, will be taken up by the upper house on Wednesday.

The bill, which will lead to introduction of Goods and Services Tax across India, will be taken up by the upper house on Wednesday.