A parliamentary panel today criticised the finance ministry over the Constitution Amendment Bill for the Goods and Services Tax (GST), questioning the rationale behind the ministry's claim that the new indirect tax regime would add one per cent to India's gross domestic product (GDP).
In its first meeting with finance ministry officials on GST, the standing committee on finance, headed by Bharatiya Janata Party leader Yashwant Sinha, posed various questions before them. It said the revenue department had not tried hard enough for an early rollout of the GST regime. The committee is likely to give its report in the monsoon session of Parliament, said a person privy to the development.
In its presentation before the committee on various facets of GST, the ministry said the proposed tax system would expand India's GDP by one per cent, or about Rs 1 lakh crore. To this, a committee member sought to know on what grounds was the ministry making such “tall claims”.
The panel also raised doubts over the ‘consensus’ approach suggested by the government for decisions in the GST Council, as proposed in the Bill.
It said consensus was a broad term, and asked the ministry to consider a better approach for decisions in the GST regime. It also questioned why the ministry was trying to bypass Parliament by giving decision-making powers to the GST Council.
Last month, the ministry’s consultative committee had suggested decisions in the GST Council be taken either by a simple or a two-thirds majority, not through consensus.
The standing committee members asked ministry officials what immediate steps had they taken to expedite GST implementation and questioned why the revenue department did not reach out to states to address their concerns on GST.
“The members told officials though they claimed the ministry was trying its best to introduce the GST regime from the beginning of the next financial year, the urgency did not result in any practical efforts on their part,” the person added.The ministry would now give written replies to all the questions posed before it in the meeting today. The committee may call the officials again for further discussions. The empowered committee of state finance ministers, along with industry chambers, is also likely to meet the committee later this month.
The ministry has claimed GST, which would subsume most indirect taxes levied by the Centre and states, is expected to reduce the overall tax burden on goods, currently 25-30 per cent. States, however, fear these would lose their autonomy in the new tax regime, in which a uniform tax rate would be levied by the Centre and states.
About 15 officials from the finance ministry, including Finance Secretary R S Gujral, and about an equal number of standing committee members were present in today’s meeting that went on for about two hours. Later in the day, former chairman of the empowered committee of state finance ministers, Asim Dasgupta, also met the committee members.