Congress wants 18 per cent cap in GST in constitution: Kamal Nath

New Delhi

Senior Congress leader Kamal Nath tonight said that the BJP’s hesitation to put an 18 per cent cap in the Goods and Services Tax in the Constitution is a “sticking point” in thrashing out a solution.

“We stand by GST. We want a good GST. We do not want a sloggy GST. We will insist on a Constitutional provision. Why BJP is hesitant….that is the sticking point”, Nath said in an interview to Karan Thapar in the ‘To the point” programme on India Today TV.

Replying to questions, Nath, a former Commerce and Industry Minister, said that the Congress was not insisting of 18 per cent tax which can be lower but it wants a cap and that “it would insist on a Constitution amendment.”

He said that inclusion of cap through a Constitution amendment would ensure that no changes are made into it by a simple majority in Parliament and it would enforce principles of consensus.

He also dismissed as ‘absurd” government’s proposal to have Council of States as the Disputes Redressal Mechanism wondering “how could disputers become the disputes redressal mechanism?”.

On its demand for an independent mechanism, Nath said that it was not stressing on an outright judicial mechanism and a quasi judicial body could be created. ‘We can work out some kind of dispute redressal…”.

He also made it clear that the Congress will not compromise on its demand of dropping altogether one per cent tax to compensate the manufacturing states saying it negates the very purpose of free movement of goods across India, which is the key objective of the GST.

At the same time, he said that GST is a Congress bill and it is “optimistic” about its passage. He said that his party would like the proposals of the government first as the ruling dispensation seems to be confused on the issue.

“We came out publicly with our three points, government should come out clearly what are their concerns about them”, he added.

Our stand on GST remains same: Congress

New Delhi

There is no major forward movement on the GST issue even a week after Prime Minister Narendra Modi reached out to Congress president Sonia Gandhi and former PM Manmohan Singh to resolve the matter, Congress indicated on Friday.

“I do not think Congress has moved away from the stand stated at the meeting with the Prime Minister… Our stand remains the same,” Congress spokesperson Sushmita Dev told reporters.

Besides, she said, “brainstorming is on” within Congress on the concerns conveyed to the party leadership by the government.

Dev slammed the government for its plan to impose two per cent cess for the ‘Skill India’ mission, thereby taking the total to five per cent for different purposes including Swachh Bharat Abhiyan.

“Today we heard an alarming new policy proposition, which will be another burden on common man. Why is common man being burdened for PM’s pet projects – Make in India, Skill India, Swachh Bharat. How much more burden will the government put?

“In light of this, our fears on GST Bill are accurate.

There has to be a cap of 18 per cent. Otherwise it’ll be difficult for people to cope with it,” she said.

She also hoped that government would roll back the additional one per cent cess brought to compensate the manufacturing states.

Besides, she faulted the government for bringing the GST bill to the Rajya Sabha soon after its passage in the Lok Sabha without holding any discussion with the opposition.

“This does not amount to good consensus politics,” she said.

Last Friday, the Prime Minister had reached out to the Congress keeping hopes alive for the enactment of the Goods and Services Tax Bill before the beginning of the next financial year.

The 45-minute meeting at 7, Race Course Road had not resulted in an immediate breakthrough, but it did serve to break the ice between the government and the Congress, with the latter consistently alleging that the ruling party was riding roughshod over the opposition in Parliament.

CEA panel on GST for 17-18% rate, dropping of 1% additional levy

New Delhi

In a recommendation that can break the political logjam over GST, a panel headed by the chief economic advisor today suggested 17-18 per cent GST rate and dropping of the one per cent additional tax on inter-state sales.

The Arvind Subramanian-headed panel, however, opposed inclusion of GST rate in the Constitution. The Congress has been demanding GST rate be included in the Constitution.

Describing GST as a historic opportunity to “Make in India by Making One India”, the panel has recommended a range for revenue-neutral rate (RNR) of 15-15.5 per cent for the proposed Goods and Services Tax (GST), with a preference for the lower one.

It also suggested a range of ‘standard’ tax rate of 17-18 per cent for bulk of goods and services while recommending 12 per cent for ‘low rate goods’ and 40 per cent for demerit goods like luxury car, aerated beverages, pan masala and tobacco. For precious metal, it recommended a range of 2-6 per cent.

While Subramanian at the press meet said the recommended standard rate is 17-18 per cent, an executive summary of the report released alongside suggested the rate to be between 16.9-18.9 per cent in a tabular form. The summary in narration, however, put the rate at 17-18 per cent.

Also, the panel recommended early inclusion of alcohol and petroleum products in GST.

“Bringing alcohol and real estate within the scope of the GST would further the government’s objectives of improving governance and reducing black money generation without compromising on states’ fiscal autonomy,” said the report, which was submitted to Finance Minister Arun Jaitley today.

The recommendations seem to suggest a middle-path approach in the deadlock between the Congress and the government, which didn’t want the GST rate to be part of the Bill as it would require a two-third majority approval of Parliament for any change in rates for any product in future.

The government wants the GST Bill to be approved in the current session of Parliament to meet the April 1, 2016, rollout deadline.

“This historic opportunity of cleaning up the tax system is not just necessary in itself, but also to support GST rates that facilitate rather than burden compliance,” the report added.

Talking to reporters, Subramanian said once the GST is implemented the indirect tax regime in India would be the best in emerging market economies and high income countries.

He said it was a “historic opportunity to rationalise exemptions that account for Rs 3.2 lakh crore or 2.5 per cent of the GDP.” The GST, which will create a uniform market, will cover 2-2.5 million tax entities.

Subramanian further said, the impact of implementation of GST on inflation is likely to be “minimal”, but there would be a need for monitoring.

Revenue Secretary Hasmukh Adhia said, “The government will study the report of the CEA-led committee on revenue neutral rate for GST and take a view on it.”

The final decision on rate, he said, “can only come from the policy choice that GST council makes for the rate structure and exemption limits”.

The Committee opined against providing a “band of rates” saying it complicates administration of the tax machinery.

“There are sound reasons not to provide for an administration-complicating band of rates, especially given the considerable flexibility and autonomy that states will preserve under the GST (including the ability to tax petroleum, alcohol, and other goods and services),” it said.

The report suggested that evaluation of GST implementation should not be taken over short-term period, but over longer period of time like 1-2 years.

It said elimination of any taxes on inter-state movement of goods would help promote Make in India and ease of doing business.

The report said facilitation of tax payer compliance and easy administration in early stages of roll out would help realising the benefits of GST and added that the aim should be to strive towards one-rate structure in the medium term.

Giving rationale for non-inclusion of GST rate in the Constitution, the report said, “setting a tax rate or an exemptions policy in stone for all time, regardless of the circumstances that will arise in future, of the macroeconomic conditions and of national priorities may not be credible or effective in the medium term”.

PTI