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Finance minister arun jaitley to meet state ministers on issues of rate cap and compensation under GST Bill

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New Delhi: The Good and Services Tax (GST) has once again hit a rough patch. Finance Minister, Arun Jaitley met the Finance Minister of different states yesterday, 26 July 2016 and the Congress Party is back to its old ways of blowing hot and cold.

Congress leaders have once again reverted to its hard stand on the much-delayed bill which tries to unify the tax structure of the country. The support of the Congress is crucial for the passage of the bill in the Rajya Sabha where the NDA does not have a majority. The Lok Sabha has passed the bill earlier.

The Finance Chiefs will be discussing amendments to the bill which has been raised by the opposition parties. It includes the setting up of a mechanism to resolve disputes.

Such a device has been demanded by the chief opposition party as well as some states like Tamil Nadu.

The Chief Economic Adviser to the Finance Ministry, Mr Arvind Subramanian, will make a presentation before the State Finance Ministers on the Revenue/Neutral rates of the GST, the rate at which the State exchequer will accrue neither loss nor profit.

The States raised the issue in the last meeting in Kolkatta. While the CEA proposed the rate to be capped at 15%, the National Institute of Public Finance and Policy pegged it at 27%.

The Congress wants it to be fixed at 18%. It also wants the change to be made in the Constitution itself to safeguard the interests of the poor.  Hectic parleys have been going on through back channel talks to bring the opposition party on board.

The Government has also decided to dump the provision of an extra 1% tax to supplement the revenues of manufacturing states to compensate the loss suffered by GST. It was a levy on consumption and not production. The opposition wants this provision to be removed.

The bill would need the nod of two third of the members in the upper house to be passed.

The focus of yesterday meeting will be on demands by the states to increase compensation to make good the losses suffered due to transition to GST structure. If everything goes well, the bill will be tabled for discussion this week.

Meanwhile, the Congress has started a shrill campaign against the government accusing it of bullying tactics.

Senior leader Mallikarjun Kharge to withdraw the flexibility it had shown when it agreed to the government for a five-hour debate on the floor of the house.

The party is irked by the Enforcement Directorate, which handles economic offences, launching an investigation against Haryana CM, Sh. Bhupinder Singh Hooda in a case which has seen the party President, Sonia Gandhi, and son Rahul Gandhi face trial.

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