GST Bill Passed in Rajya Sabha: Here’s How the Debate Unfolded
Congress’ Abhishek Manu Singhvi said the party would be in favour of passing the bill if there were no “obstacles.”
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- The Constitutional Amendment Bill has been unanimously passed in the Rajya Sabha with 203 votes.
- Former Finance Minister P Chidambaram demanded that the GST rate should not cross 18 percent.
- Congress demanded that the Bill be passed as a Finance Bill.
- The Bill will go back to the Lok Sabha for re-evaluation.
- Finance Minister Arun Jaitley is hopeful of implementing the GST from April 2017.
- Jaitley announced on Tuesday that manufacturing states like Maharashtra, Gujarat will be compensated for 5 years.
- Opposition parties argued that the GST will take away states’ flexibility.
- Interstate tax of 1 percent also has been scrapped by Jaitley.
- AIADMK stages a walk out from the Rajya Sabha.
The Rajya Sabha on Wednesday passed the Goods and Services Tax (GST) Constitutional Amendment Bill, which the Lok Sabha had already approved last year. The exact rate of the tax will only be decided in the weeks or months ahead.
The legislation was approved by the Rajya Sabha with 203 votes in favour and none against, in the 243-member House. The bill was passed after a after a seven-hour debate.
Finance Minister Arun Jaitley and his predecessor P Chidambaram exchanged their views in the Rajya Sabha as the House discussed the historic Constitution Amendment Bill on GST.
Chidambaram reiterated the demand of a united opposition that the bills under the GST constitutional amendment be brought as a finance bill and not as a money bill.
Arun Jaitley, in his reply said, “In accordance with the precedence, if a bill is a taxing bill, the bill section of the parliament recommends it to be finance bill, otherwise a money bill. We have no intention to bypass the constitution.”
Here’s a video on how the GST Bill will be good for you.
Replying to the debate during which most parties pressed for a Constitutional cap on GST tax rate at 18 percent, Finance Minister Arun Jaitley said the guiding principle would be to keep the “rates as low as possible, certainly lower than what it is today”.
Six official amendments, including scrapping of one percent additional tax for inter-state sales, moved by the government were approved with cent percent votes.
The bill was passed by the Lok Sabha earlier but it will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha. The bill will also have to be approved by 50 percent of all the state Assemblies.
AIADMK was the only party to oppose the measure and its members staged a walkout from the House maintaining that their recommendations hadn’t been considered.
Prime Minister, Narendra Modi thanked the leaders and members of all parties for the passage of the GST Bill.
Union Minister of Finance, Arun Jaitley said that 3 August was a historic day for Indian democracy and federalism.
Congress leaders, however, echoed their doubts regarding the Bill.
Congress and BJP Divided Over GST Being a Finance or Money Bill
Chidambaram and Jaitley debated over the issue of whether GST should be a Money Bill or Finance Bill.
The Rajya Sabha votes for the GST constitutional amendment bill with a majority of 197 votes barring AIADMK.
The individual clauses are currently being voted on.
AIADMK Stages a Walk Out
A Navaneethakrishnan announced that AIADMK will be walking out and not voting because their recommendations were not taken into consideration.
In his conclusive address to the Rajya Sabha, Union Minister of Finance, Arun Jaitley said that he was going to provide some clarity as to how the entire system would function if the GST were to be implemented.
Referring to Yechury’s argument that India is a union of states and that the Centre should not have sovereignty but also allow state to have flexible policies, he said,
In his reply to Satish Chandra Mishra’s concerns of the centre having veto powers in the GST council, Jaitley said:
Regarding the concerns of the provisions of compensation to the state, Jaitley said that the language of the clause is such that the centre is mandated to provide compensation.
Taking a dig at former Union Minister of Finance, P Chidambaram, he said:
Taking up Chidambaram’s comment of “clumsy drafting” of the Bill, Jaitley said that the draft is Dr BR Ambedkar’s own words, when Chidambaram attempted to clarify what he meant by his comment.
Resuming his address, Jaitley talked on the issues of entry tax that was raised by several MPs from Maharashtra. He said that the state government can implement a law in favour of its municipality for their taxes.
Watch live session of the Rajya Sabha.
CPI leader D Raja raised the importance of fiscal federalism in the Rajya Sabha.
Will you pay more taxes with the implementation of GST? Watch the Bloombergquint live.
Centre is Trying to Make a Beggar of Mumbai With GST: Shiv Sena
Shiva Sena Leader, Sanjay Raut argued on the revenue losses of Rs 7000 crore that Mumbai will face after the implementation of the GST Bill.
INC Member from Karnataka, Rajeev Gowda pointed out that the government needs to have clarity on the policies that will have to formulated after the implementation of GST.
Nominated MP, Narendra Jadhav and MP from Karnataka, Rajeev Chandrasekhar both criticized the arguments against the GST Bill.
While Chandrasekhar said “a less than perfect GST is better than no GST”, Jadhav said it that “GST is the most significant reform in India since 1991.”
The #GST Constitutional Amendment bill should be moved as a finance bill,” Indian National Congress spokesperson Abhishek Manu Singhvi to BloombergQuint.
Markets Caution Over GST Bill, Sensex Takes the Fourth Plunge
Extending a downward trend for the fourth session, benchmark BSE Sensex plunged over 284 points to end at a three-week low of 27,697.51 and NSE Nifty went below the 8,600-mark on lacklustre global cues and caution ahead of the decision on the landmark GST Bill.
Investors started cutting down their bets amid caution over passage of the long-pending GST Bill in the Rajya Sabha, which has been moved for consideration on Wednesday.
How will the the GST impact infrastructure?
BSP MP from Uttar Pradesh, Satish Chandra Mishra also reiterated Yechury’s arguments about how different states have different issues of different natures, based on which they decide how to collect the revenues.
He said that despite the presence of state representatives in the GST council, should one state face an issue in isolation, it may or may not get the support from other states which is required to pass the matter in the council.
Watch this space to know how GST will impact the prices of medicines.
Yechury Suggests Fair Revenue Rate Instead of the Revenue Neutral Rate
CPI(M) leader Sitaram Yechury joked that “Chidambaram sounds much better from the other side of the aisle!”.
Yechury contended that states require some revenue flexibility to “collect revenue for what they think is important”.
Instead of a revenue neutral rate, he suggested the consideration of a fair revenue rate.
Yechury also sought clarification on where the revenue collections will go.
Sharad Yadav, leader of Janata Dal United, said he supported the GST Bill.
However, he requested to bring this Bill in as a Financial Bill and not as a Money Bill.
Watch this space to know the impact of GST on FMCG
GST Should be Called ‘Girgit Samjhauta Bill’
Derek O’Brien, leader of Trinamool Congress, contended that the GST has been a “ping-pong match between the Congress and the BJP for 10 years”.
He quoted past statements made by MPs from both BJP and the Congress on the GST Bill.
O’Brien listed out the countries where parties won after the GST was introduced – Australia, Russia, UK – and the countries where certain parties lost after GST – South Africa, Brazil. He urged the Congress and the BJP to not push the Bill “for the purpose of winning an election because it could go either way”.
Watch this space to know how GST will impact consumer durables.
Here’s what Lok Sabha MP Kirit Somaiya had to say on the GST to the BloombergQuint.
GST Will Cause Revenue Loss to Tamil Nadu
A Navaneethakrishnan of the AIADMK and former Advocate General of the Madras High Court told the Rajya Sabha that his party strongly opposes the Bill because “it violates the fiscal autonomy of states” and will cause a loss of Rs 9,270 crores of revenue losses to the state of Tamil Nadu.
Watch this space to know about the impact of GST.
Major Issues
1: Double Counting: The matter of double counting, and missing out on taxable income, is the major issue of implementing a new tax system, Chidambaram said.
2: Dispute Resolution: It is the second most important problem with the proposed Bill. Amendment to Article 31 is not our demand, he said. Just as the government is zealous of guarding executive power, the judges are zealous about guarding their judicial power.
Chidmabaram advised Jaitley to consider inclusion of other disputes, besides the ones defined in the draft Bill, and make provisions to solve them before they arise.
3. Rate of Tax: The rate of GST is the heart of this Bill. The Congress did not come up with the 18 percent rate from thin air, he said, but from the reports formed by the Chief Economic Advisor (CEA) for the current government.
The rate, he said, is necessary to avoid the change in rate to be subject top the whims of the government’s executives. The standard rate of GST, therefore, should not exceed 18 percent.
P Chidambaram Counters Jaitley
Former Finance Minister P Chidmabaram is providing a counter to the GST debate introduced by Arun Jaitley.
He thanked Jaitley for acknowledging GST as the Congress’ brainchild before saying that his party has had nothing against the tax system but the 2014 Bill itself.
He pointed out that his party opposed the Bill as they believed it can be much better, although he agreed that there is no perfect Bill.
Arun Jaitley Initiates GST Debate
Finance Minister Arun Jaitley initiated the debate to pass the Constitution Amendment Bill which was passed by the Lok Sabha in earlier Parliament session.
The Bill seeks to subsume various taxes as far as the central and state governments are concerned. According to the Centre, alcohol will be kept out and on the states’ request, petrol will be kept out of the ambit of GST. However, consumable alcohol will later will be taxable under GST.
This will happen after when the committee gives an approval to the idea.
The much delayed Goods and Services Tax (GST) Bill is scheduled to be moved by Finance Minister Arun Jaitley in the Rajya Sabha on Wednesday. The Bharatiya Janata Party (BJP) will hold a Parliamentary meeting before the session begins.
The government on Tuesday circulated official amendments to the GST Bill to drop 1 percent additional tax.
The government also included a definite provision in the statute for compensating states for revenue loss for five years as it gears up to discuss the long-pending Bill.
The Constitution (One Hundred and Twenty-Second Amendment) Bill, 2014 will make provision for introduction of GST in the Constitution.
Will Be in Favour of Passing the Bill If There Are No ‘Obstacles’: Congress
However, a Congress demand – to specify the GST rate in the statute – has not been accepted. Last week, West Bengal Finance Minister Amit Mitra chaired a GST panel meet in which all states agreed to keep the GST rate out of the bill.
However, in a meeting between Congress MPs and former Finance Minister P Chidambaram and Commerce Minster Anand Sharma, the party has decided to agree on incorporating their demand in the central GST Bill and not the Constitution Amendment Bill, reports The Economic Times.
On Tuesday, Congress MP Abhishek Manu Singhvi said the party would be in favour of passing the Bill if there were no “obstacles”, but did not elaborate what these obstacles could be.
Watch BloombergQuint’s Video on How Ready India is for the GST Bill
Industry Body, Personalities (Including Tendulkar) Back GST
Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) said it was looking forward to the introduction of the much-awaited GST Bill.
The CPI(M) Refuses to Reveal its Strategy on the GST Bill
Keeping its cards close to its chest, the party has said that it will deal with the GST Bill on the floor of the Rajya Sabha.
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