Reportedly on Wednesday, the cabinet cleared the changes in the the GST Constitutional Amendment Bill. The changes made accompany 1 per cent drop in manufacturing tax and compensating the states that undergo any revenue loss in the first 5 years of the providing guarantee to compensate states for any revenue loss in the first five years of rollout of the proposed indirect tax regime.
The Cabinet, headed by Prime Minister Narendra Modi, decided to include the changes made in the Constitutional Amendment Bill which will settle any any dispute between states and the Centre. The government is hopeful towards the implementation of the long-pending Goods and Services Tax (GST) Bill in the ongoing monsoon session of Parliament, which ends on August 12.
The changes approved by the Cabinet are to the Constitutional Amendment Bill that was approved by the Lok Sabha in August last year. Now, the approval of the Rajya Sabha is awaited so that the legislation could send back to the lok sabha for final approval.
“The amendments to the GST Constitutional Amendment Bill have been cleared,” a top official said after the meeting of the Union Cabinet chaired by Modi.
The decision was taken after the meeting of Finance Minister Arun Jaitley with the state finance ministers. The meeting held was about the centre’s assurance about compensating on behalf of the to all the loss of revenue for five years and let the GST mechanism work.
However, the selection committee of the Rajya sabha has recommended for 100 percent compensation on losses in revenue for five years. The present Bill states that the Centre will provide 100 percent compensation to states for first three years, 75 per cent and 50 per cent for the next upcoming two years.
As per the amendments, the Centre guarantees the states for any loss of revenue from the GST subsuming all indirect taxes, including VAT, in the first five years of introduction. By imposing 1 per cent inter-state tax over and above the GST rate, the government has already met the key demand on which the Opposition Congress party has been creating hurdles for the bill in the upper house.
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