Ring-fencing GST rate 'sensible suggestion': Govt functionary

Congress' Deputy Leader in the Rajya Sabha Anand Sharma is reported to have said that his party is open to discussions on the Bill

As the Congress showed signs of softening its stand on the Goods and Services Tax (GST) Bill if the tax rate is "ring-fenced", a top government functionary today said it is a "sensible suggestion" and talks will continue with the Opposition party.

The Congress, which originally mooted GST, in 2009, to replace all indirect taxes, has been demanding that the overall rate be capped at 18% and scrapping of an additional 1% tax designed to compensate manufacturing states that fear losing out revenue.

Anand Sharma, Congress' Deputy Leader in Rajya Sabha where the GST Bill is stuck, is reported to have said that his party is open to discussing its demand of including the tax rate in the Constitutional Amendment Bill if the government were to come out with a suggestion to ring-fence the tax rate.

Reacting to it, the top government functionary said, "It's a sensible suggestion. We will keep talking to them."

Since November last year, the Congress has been insisting that a specified GST rate of 18% should be mentioned in the Constitutional Amendment Bill, the 1% additional tax should be abolished and a GST Disputes Settlement Authority formed to settle state disputes.

Finance Minister Arun Jaitley has, however, consistently maintained that nowhere in the world tax rates are put in the Constitution and the government needs to have flexibility to change the rates in case of contingencies like a natural calamity.

The government is keen to get the GST Bill cleared in the upcoming Monsoon session of Parliament and there is a buzz that it may table the Bill in the Upper House on the very first day of the session on July 18.

Jaitley is also said to be open to talking to the senior leadership of the Congress before the session begins.

The government is banking on support from smaller regional parties to pass the national sales tax legislation in the Upper House of Parliament and then get supporting laws enacted by the year-end so that GST is introduced from April 2017.

GST Bill, which intends to convert 29 states into a single market through a new indirect tax regime, was earlier planned to be introduced from April 1 this year, but the deadline was missed as the Bill to roll it out remains in a limbo in the Opposition-dominated Rajya Sabha.

After Parliament approves the constitutional amendment to allow GST, it needs to be ratified by more than half of the states. Then, Parliament must pass another Bill to implement GST.

After the Constitution Amendment Bill is passed in Parliament, there are three more legislation – central GST, state GST and integrated GST – which are required to be passed.

The GST Bill, which will help create a single national sales tax to replace several state and central levies, has already been approved by the Lok Sabha and is pending in the Upper House where the government doesn't have a majority.