Govt seeks cabinet’s approval for amendments to GST Bill

The government is ready with amendments to the Constitution (122nd Amendment) Bill on Goods and Service Tax (GST) incorporating the suggestions of a Rajya Sabha select panel, which endorsed most of the clauses in the Bill verbatim and a few with some changes.

Sources said the finance ministry will soon seek cabinet approval for making amendments to the Bill, which was passed in the Lok Sabha during the Budget session and is pending in the Rajya Sabha. The government would propose a few amendments and try to get the Bill passed in the Rajya Sabha as soon as it starts functioning without disruption from the opposition, sources said.

The government is in agreement with the select panel’s recommendations about giving full five-year compensation to states for any revenue loss due to introduction of GST as well as to exempt stock transfers within group companies from the 1% origin based tax on inter-state supplies.

The Rajya Sabha panel turned down a series of substantive demands made by the Congress party and Jayalalithaa’s AIADMK. The Congress’ demand for dropping the 1% tax on inter-state supply of items, which would benefit the exporting state, was not accepted. Instead, the panel recommended a practical solution to reduce its cascading impact by excluding stock transfers within a company from this levy. According to industry sources, about 80-85% of any large factory’s output goes out of the state where it is located and a bulk of this is stock transfers.

The Congress party’s demand for a constitutional provision mandating the GST council to bring petroleum products within the GST in five years of the new regime’s beginning, as well as the AIADMK demand for their constitutional exclusion from the GST, were not accepted. The panel also did not propose any change in the voting pattern of the GST council, a decision-making body to be set up, as demanded by the Congress and AIADMK. Also, calls from parties for extra taxation rights for states on tobacco as well as the Congress’ demand for a dispute-settlement body were not accepted.