Govt says accepts Congress demands on GST bill

NEW DELHI (Reuters) - The government said on Thursday it agreed to accept demands set by the Congress party to back a landmark tax reform, raising hopes a political standoff that blocked the measure throughout last year might be resolved.

Parliamentary Affairs Minister Venkaiah Naidu also said the government was willing to bring forward the next parliament session to pass the proposed goods and services tax bill (GST) if Congress supports the measure.

The proposed tax, India's biggest revenue shake-up since independence in 1947, would seek to replace a slew of federal and state levies, transforming the nation of 1.2 billion people into a customs union.

Naidu met Congress leader Sonia Gandhi on Thursday to convey the government's decision. Gandhi, however, didn't assure him of her party's support.

"Sonia said they (Congress) will discuss among themselves and take a final decision," Naidu said. The Congress press team was not immediately available for comment.

The Congress party, the original author of the tax reform, has opposed what it calls the "flawed" version now before parliament, where it has been able to block a key constitutional enabling amendment in the upper house.

It wants the government to cap the GST rate at less than 20 percent, scrap a proposed state levy and create an independent mechanism to resolve disputes on revenue sharing between states.

(Reporting by Rajesh Kumar Singh; Editing by Douglas Busvine)