The Goods and Services Tax bill, India’s biggest tax reform, is all set to be tabled in Rajya Sabha and to become a reality after nine years when it was introduced in Parliament.
The tax reform bill was passed by the Lok Sabha last year but remained stuck in the Upper House where the ruling NDA does not have the numbers.
The government circulated official amendments on Tuesday that addressed the concerns of the Congress and other opposition parties, scrapping a proposed 1% additional tax, and mandatory compensation for revenue loss of states under the new tax regime.
Under the modified provisions of GST Constitutional Amendment Bill (tax reform) circulated among the members yesterday, GST Council will be required to establish a mechanism for arbitration of disputes, which could arise between the Centre and states or among states themselves.
Although the Centre rejected the Congress’ demand to cap the GST rate at 18% in the amendment bill, it accepted a demand of regional parties that tax collected by state governments will not be parked in the consolidated fund of India, to allow quick disbursements.
Finance Minister Arun Jaitley, at a meeting with his state counterparts last week, promised to keep the incidence of tax low while safeguarding the revenue of the states.