Rajya Sabha set to approve GST legislation tomorrow

Jaitley will move four amendments to the tax reform Bill

The Bill to amend the Constitution, paving the way for the biggest, long-pending and much awaited indirect tax reform, is all set to be approved by the Rajya Sabha on Wednesday. Union Finance Minister Arun Jaitley will move four amendments to the Constitution (122nd Amendment) Bill, meant for the roll-out of the Goods & Services Tax (GST) in the House, when it is taken up for consideration and passage.

The planned amendments will seek to withdraw the 1 per cent additional tax proposed earlier, guarantee the States full compensation over a period of five years for any losses from the shift to the new tax and propose a new mechanism for dispute resolution, in which the States will have a greater say.

Mandate on tax rate

The fourth amendment to the Bill — passed by the Lok Sabha in May 2015, but stuck in the Rajya Sabha, where the ruling BJP does not have a majority — will be to introduce a fresh assurance that the GST rate will be governed by the following basic principle: it will neither lead to revenue losses for the States nor will it hurt the consumers.

The government’s decision to move these four amendments have helped to bring the Congress on the same page as far as the Bill is concerned.

A Rajya Sabha member from the party said the Congress members in the Upper House will vote in favour of the Bill on Wednesday.

A three-line whip has been issued by the BJP to its members to be present in the House.

The Bill cannot be passed in the Upper House without support from the Congress as a constitutional amendment needs the support of two-thirds of the members voting.

Three demands

The main Opposition party had raised three demands for supporting the Bill: A constitutional cap of 18 per cent on the GST rate, a provision in the Constitution for establishing an independent dispute resolution mechanism and dropping the 1 per cent additional tax.

The amendments proposed to be moved by Mr. Jaitley directly take care of the second and the third demand.

Explaining the party’s position on the first condition, Deputy Leader of the Opposition in the Rajya Sabha and senior Congress leader Anand Sharma, after talks with the government, said on Friday that the party would support the Bill if the government “legally ring-fenced” the GST rate — not in the Constitution, but in GST laws that will follow its passage.