Lalit Modi row could stall GST roll out

Congress has come up with a list of ‘five non-negotiables’

The ongoing stalemate over the Lalit Modi controversy could derail the government’s plans to roll out the Goods and Services Tax (GST) regime from the next fiscal.

The Congress has already identified five “non-negotiables” vis-à-vis the GST. The government’s decision to defend External Affairs Minister Sushma Swaraj has only added to the Congress’s arsenal.

Still smarting from the manner in which the BJP benches had disrupted House proceedings — session after session — through the UPA decade, the Congress appears to be planning to pay back in kind; at least in the Rajya Sabha where it has the numbers and can stall a Constitution Amendment Bill.

Congress leaders said the GST, in particular, was stalled by the BJP with the then Gujarat Chief Minister Narendra Modi leading the charge against it when the UPA tried to introduce it, and the parliamentary committee under Yashwant Sinha taking two-and-a-half years to submit its report.

The reservations that various State governments have to some of the provisions of the Constitution (122nd Amendment) Bill have come in handy for the Congress. On the basis of these apprehensions expressed by various quarters, the Congress had drawn up what it calls the list of “five non-negotiables” on the GST.

Not to exceed 18%

For one, the Congress wants the government to write into the Bill that the GST rate will not exceed 18 per cent. The international norm is in the vicinity of 16 per cent.

Second, the additional one per cent tax that has been allowed to manufacturing States “should go” as this would defeat the entire purpose of GST. This additional tax was introduced at the behest of manufacturing States, particularly BJP-ruled Maharashtra and Gujarat.

Also, the Congress wants the NDA to bring back the clause for an independent disputes settlement mechanism that was part of the UPA’s GST Bill introduced in 2011. The party also wants greater clarity on the compensation formula besides including duty on tobacco and electricity in GST.

The Bill, which was cleared by the Lok Sabha in the second half of the budget session, is currently under the scrutiny of a Select Committee of the Rajya Sabha.

The committee had its first meeting on Monday in Chennai where it met representatives of the governments of Tamil Nadu, Kerala and Puducherry. It also plans to travel to Kolkata and Mumbai to get the mood in these two regions on the GST which has been billed as the “biggest tax reform since 1947” by Union Finance Minister Arun Jaitley.