As the finance ministry awaits the report of Parliament’s standing committee on the Constitution Amendment Bill for a Goods and Services Tax (GST), members of Parliament (MPs) have suggested some corrections. The consultative committee attached to the ministry has said decisions in the GST council should be taken either by a simple or a two-thirds majority, rather than by consensus, as proposed in the Bill.
"The provision of taking a decision by consensus by the GST council is not practicable, as it can lead to stalling of its smooth functioning," the committee observed in its meeting with Finance Minister Pranab Mukherjee on Monday. Other mechanisms for taking decisions could also be considered, it said.
In the first draft of the Constitution Amendment Bill, the Centre had proposed a majority of at least two-thirds in the GST council for taking decisions. However, the Union finance minister would get veto powers, as the finance ministry felt this was necessary to protect the interests of the Centre. The states, however, said veto powers to the finance minister would affect their interests.
In the revised draft, the finance ministry dropped the provisions of two-thirds majority and veto powers to the finance minister, saying all the decisions in the council would be taken by "consensus".
Most MPs present in the meeting said the GST should be introduced as soon as possible, as it would lead to higher tax collections, both by states as well as the Centre, and lead to a 1-1.5 per cent increase in gross domestic product growth of the country. They, however, cautioned the introduction of the GST should not be inflationary.
Mukherjee said GST would reduce the overall tax burden on goods, currently 25-30 per cent. He expressed hope that the standing committee on finance would give its report on the Bill so that the process of legislation in this direction could move forward.
The committee members suggested there should be a single point of taxation, as multi-point taxation led to harassment of businessmen and traders. It was also suggested the threshold limit should be kept little higher so that small traders were outside the purview of GST. The members said there should be uniform tax rates in all states to ensure traders did not indulge in tax-evasion.
Other suggestions included inclusion of new industrial units within the ambit of the GST, linking subsidy provided for various goods and services with the GST network and simplifying the current provision for settlement of disputes between states, as well as those between state(s) and the Centre.
The meeting was attended by Ministers of State for Finance S S Palanimanickam and Namo Narain Meena. From the Lok Sabha, Anto Antony, Mukesh V Gadhvi, Narahari Mahto, Natubhai Gomanbhai Patel, Prabhatsinh Chauhan, Rajkumari Ratna Singh, S P Y Reddy, Suresh C Angadi, Vijay Inder Singla, W Bhausaheb Rajaram and M S Reddy attended the meeting, while those from the Rajya Sabha were Amar Singh, Mukut Mithi, N K Singh, Rajkumar Dhoot, Sabir Ali and Ashok Sekhar Ganguly.
