GST bill clear Lok Sabha hurdle, now for the Rajya Sabha test

NEW DELHI: The constitutional amendment bill for rolling out the long-pending goods and services tax cleared the first hurdle with the legislation receiving Lok Sabha approval on Wednesday. Now, the bill faces a sterner test in the upper House, where the NDA is in a minority, and opposition parties led by the Congress are demanding that it should be sent to the standing committee.
Congress lodged its protest by walking out of Lok Sabha even as the bill, first introduced by Pranab Mukherjee in 2011, was passed. The bill was passed by 352 votes to 37.
READ ALSO:Cloud over GST bill as Congress wants scrutiny
Finance minister Arun Jaitley, who approached the opposition benches and thanked them after the bill was passed, had earlier assured jittery states that the Centre would compensate them for any revenue loss and assured that the new uniform indirect tax rate would be much less than 27% recommended by an expert panel.
The Narendra Modi government has set April 1, 2016 as the latest deadline for implementing GST, which will subsume excise, service tax, state VAT, entry tax, octroi and other state levies. But for that to happen, the constitution amendment bill needs to be cleared by Rajya Sabha and has to be endorsed by state legislatures. Subsequently, the Centre and states will decide on the tax rate and a GST Bill will have to be approved by Parliament.
With the BJP and its allies in minority in Rajya Sabha, the bill is expected to face some stiff opposition as the Congress is determined to send it to a parliamentary standing committee. With most parties having made their stand clear, AIADMK, which has remained ambivalent on the issue, is key to the bill's passage.
Congress is also likely to rally parties from manufacturing states such as Tamil Nadu and Maharashtra as they have raised concerns of losing revenue. Conversely, BJP is hoping for support of parties from consuming states such as UP and Odisha as they are likely to be gainers from the new tax regime.
The government would need at least 122 votes in the 243-member Rajya Sabha as the bill is required to be passed by two-third of the total members present and voting, which cannot be less than the simple majority of the actual strength of the House.
Sources said Congress, with its likely supporters including the Left, could muster anywhere between 90 to 100 votes. BJP, which has 47 seats, would be hoping that JD(U), SP and BSP with 37 votes between them will vote in favour of the bill and that it will be able to swing AIADMK, which has 11 seats, to its side.
In Lok Sabha, replying to the debate on the bill before Congress walked out, Jaitley said the proposal to reform indirect taxes was pending for the last 12 years and his predecessor P Chidambaram had also mooted it during UPA rule.
READ ALSO:Congress slams government for not referring GST Bill to standing committee
Rejecting the opposition demand for referring the bill to the standing committee, he said the panel had already examined various provisions of the new legislation and several of its suggestions had been incorporated. "A bill is not a dancing instrument that it will be jumping from standing committee to standing committee," he said.
Commending the bill, he said this was a "very important moment" because the whole process of indirect taxation in India would change once the GST was implemented.
With regard to a recommendation of an expert panel for revenue-neutral GST rate of 27%, Jaitley said it was "too high" and would be "much diluted".
He said GST would ensure seamless and uniform indirect tax regime besides lowering inflation and promoting growth in the long run as he sought to allay concerns of the states that they would be hurt by its implementation.