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BW Businessworld

Cong Continues To Play Hardball, To Decide GST Strategy On Nov 27

The government has indicated that it is willing to concede some of the demands of the Congress, but it would be highly unrealistic to think that all Congress demands would be met

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Even as the Narendra Modi government reached out to the Congress on the Goods and Services Tax (GST) bill, the Congress has said that it will firm up its parliamentary strategy on the Constitution amendment bill on November 27. “Our top leaders will meet on November 27, and will finalise our course of action on the bill for the session,” Leader of Congress party in Lok Sabha, Mallikarjun Kharge, told Businessworld on Tuesday (24 November).

The Congress has decided to press for five changes in the GST Bill, which the Centre still hopes to roll out from April 2016. Sources say that Congress wants the inclusion of tobacco and electricity under the GST regime, which are so far exempted. They also want that one per cent of tax, which has been imposed over and above GST to compensate the manufacturing states, is removed. The party feels that if that provision was implemented, only states like Gujarat, Maharashtra and Tamil Nadu will benefit at the cost of other states. Besides it wants that the government should mention the compensation formulae in the bill. Congress is also stressing on restoring the dispute settlement provision in the bill, which it said, existed in the earlier bill introduced by UPA. Among their other demands it the fixing of a ceiling for the GST rate at 18 per cent.

The government has indicated that it is willing to concede some of the demands of the Congress, but it would be highly unrealistic to think that all Congress demands would be met .

The government, at the same time, feels that while it has reached out to the Congress and is willing to engage even Congress president Sonia Gandhi (FM Arun Jaitley has already met Rahul Gandhi, Ghulam Nabi Azad and spoken to Anand Sharma), the Congress may still disrupt the proceedings and not allow Parliament to run at all. The main opposition party has already given notices for a discussion on intolerance in both the Houses, and the move is likely to be supported by a host of other Opposition parties.

GST is touted as the single biggest indirect tax reform since Independence, and it will subsume various levies like excise duty, service tax, entry tax and octroi. The Congress is harping on the insecurity of States of losing revenue once GST is implemented. “The Congress is hoping to get several states to rally behind them as they are playing at the States’ fear of losing control over revenue,” explained a top source in the know of the matter.

Many of the demands made by Congress are difficult for the Centre to incorporate at this stage. The GST Constitution Amendment Bill has already been approved by the Empowered Committee of State Finance Ministers, and changes at this point will mean the implementation of this indirect tax being deferred indefinitely. The years of debate over tobacco and electricity within the Empowered Committee is well known.

Most of the regional groupings are on board on GST with even Janata Dal (United) leaders telling Businessworld that Bihar Chief Minister Nitish Kumar wants to cooperate with the Centre on passing this landmark bill. Trinamool’s Derek O’brien has also told Businessworld that “his party has been in support of and will stay in support of the GST bill”. The AIADMK has problems with the bill, and the Prime Minister and the Finance Minister have tried to reach out to the Tamil Nadu Chief Minister J Jayaliathaa. Asked if that would mean a change of heart, party leader in the Rajya Sabha Navneethakrishnan told Businessworld that “they would reveal their stand only when the bill is taken up for discussion in the House, at the directions of their leader”.