Government to engage Congress to break GST deadlock
April, 08th 2016
The government will attempt to break the deadlock on the Goods and Services Tax (GST) Bill in the Rajya Sabha by engaging the opposition Congress party in discussions, Finance Minister Arun Jaitley said on Thursday.
"The only opponent on the GST is the Congress party. In its belated wisdom, the Congress has demanded a constitutional cap on the GST rate. I am going to discuss with them," he said, addressing the Growth Net conference here.
Jaitley said the GST Council would decide the tax rate, but he favoured a "reasonable" rate.
"I hope there will be some consensus on that reasonable rate between two national parties," the minister said.
The bill for a pan-India GST for a thorough reform of the country's indirect tax regime has been passed by the Lok Sabha, but is stalled in the Rajya Sabha, where the ruling National Democratic Alliance (NDA) lacks a majority.
The government hopes to have the bill passed in the second half of the Budget session of Parliament beginning on April 25.
Jaitley juxtaposed the use of the upper house to "block" the decision making with the need to allow the view of the "directly elected house" -- the Lok Sabha -- to prevail.
"To what extent our upper house is going to be used to block economic decision making. In Australia the debate is on; the UK has gone through this debate a while ago, and Italy is having the same debate. Because ultimately the weight of a directly elected House will always have to be maintained," he said.
The finance minister said the Congress party, which had sponsored the law in the first place, has now "curiously" changed its stand.
"I am faced with a reversal of position when I accept some of the moves which the Congress party itself started," he said.
"GST was first mooted by Chidambaram and then introduced by the present President when he was finance minister, and there is no point in taking a reversal as far as those issues are concerned," he said, referring to two of his predecessors.
Referring to the ongoing opposition to levying of excise duty on jewellery, Jaitley said it is not justified to keep "luxury items" untaxed.
"I want to make it clear that when tax imposes on items of common people and the society runs through tax, then it's not justified to keep luxury items aside from tax," he said.
On Monday, he said exempting luxury items from indirect tax would not help keeping the proposed GST rate in the 16-18 percent range.
"If luxury items are kept out, then it will be very difficult to keep the GST (Goods and Services Tax) rate between 16 percent and 18 percent," Jaitley had said.
Jewellers are continuing their protest strike against the one percent excise duty on non-silver jewellery introduced by the finance minister in the union budget for the current financial year.
Jaitley had earlier said an 18 percent cap on the GST rate as suggested by the Congress party would result in a flawed system as it could lower duties on a host of "sin" products and luxury items that should attract higher taxes.