Cap GST rate at 18 per cent, says Congress

New Delhi: The Congress on Wednesday made it clear to the government that firm assurances for keeping the GST rate capped at 18 per cent and bringing subsequent legislations needed for its rollout as financial bills alone could ensure its support to the long-pending Constitution Amendment bill.

Former Finance Minister P. Chidambaram virtually laid down these conditions hours before the Bill is to come up for passage in the Upper House.

At the AICC briefing, Mr Chidambaram who is also a senior party spokesman, evaded a direct reply to a query on whether bringing the subsequent legislations —  Central GST (CGST) and Integrated GST (IGST) —  as financial Bills was a new condition put forth by the Congress before it backs the legislation.

“We also demanded an assurance that the CGST and IGST should not be moved as money bill. The CGST and IGST are bills which will apply on taxpayers, on common man. They must be debated and voted upon by both Houses We hope to get assurance from the Finance Minister. If these assurances are forthcoming, we will be able to support,” Chidambaram said.

Noting that the report of the CEA Arvind Subramanian was a “solid economic document,” he said it has suggested that a revenue neutral rate should be between 15 and 15.5 per cent and the standard rate should be 18 per cent.
He insisted that there has been a broad consensus among opposition parties that the standard rate of 18 per cent would be an “appropriate rate”, it would be non-inflationary, it would be “something that could be sold to the people of India and it would be something that would not lead to tax evasion.”

AIADMK stages walkout
Main opposition Congress and most other parties, except AIADMK, on Wednesday expressed support, with certain conditions, to the introduction of GST in the country as the Rajya Sabha took up the much-delayed bill to amend the Constitution for allowing the measure.

Moving the Constitution (122nd Amendment) Bill, 2014 amid thumping of desks by the entire House, Finance Minister Arun Jaitley said it was one of the most significant tax reforms in India in recent history that has been brought after a “broad consensus”.

The Bill was supported by Congress and most of the other parties like Samajwadi Party, JD(U) and Trinamul Congress. AIADMK, however, opposed the move.

AIADMK was the only party to oppose the measure and its members staged a walkout from the House to register their unhappiness over the bill which lays the ground for rollout of uniform GST regime that will subsume all indirect taxes including central excise duty and state VAT/sales tax.

Navaneetha Krishnan (AIADMK) opposed the Bill, saying “This constitutional amendment Bill is not valid. It violates the states' fiscal autonomy. It will give permanent revenue loss to Tamil Nadu. We oppose it.” Noting that federalism is the basic feature of constitution, he said the Bill violates federalism.

“It also violates Article 21 of the Constitution. This Parliament has no competence to bring this Bill violative of federalism,” he said. Arguing that Tamil Nadu is a manufacturing state, he said the state will lose substantial revenue.