Government is likely to list the much-delayed GST Bill for discussion in the Rajya Sabha this week after Finance Minister Arun Jaitley meets state finance ministers on Tuesday.
Jaitley, who has been engaged in back-channel negotiations with Congress leaders to get the main opposition party on board, will discuss proposed amendments to the GST legislation passed by the Lok Sabha at the meeting of the empowered committee of state finance ministers.
The meeting may take up changes as demanded by the Congress in the constitutional amendment Bill, including one for scrapping of one per cent additional tax in hands of the states, official sources said.
The Goods and Services Tax (GST) Bill will be listed for discussion in the Rajya Sabha after taking on board views of the states.
On Friday, while listing out government business for the week beginning July 25, Minister of State for Parliamentary Affairs Mukhtar Abbas Naqvi told the Rajya Sabha that the GST Bill will come up for discussion next week.
"(This is for) further consideration and passing of the Constitution 122nd Amendment Bill, 2014, as passed by the Lok Sabha and as reported by the Select Committee of the Rajya Sabha," he said in the Upper House. The Congress, which originally mooted GST in 2009 to replace all indirect taxes, has been demanding that the overall rate be capped at 18 per cent and scrapping of an additional 1 per cent tax designed to compensate manufacturing states that fear losing out on revenue. It also wants an independent mechanism to resolve disputes between states over revenue sharing.
While Jaitley has indicated his openness in scrapping the 1 per cent additional tax after a panel headed by Chief Economic Advisor Arvind Subramanian favoured it, the issue needs to be discussed with the manufacturing states.
In order to mobilise support from regional parties for the long-pending indirect tax reform, Jaitley met Bihar Chief Minister and JD(U) leader Nitish Kumar and courted senior leadership of Andhra Pradesh and Telangana over the weekend. The government is counting on regional parties to push through the legislation in the Rajya Sabha. After meeting Jaitley last week, Bihar Chief Minister and JD(U) leader Nitish Kumar is backing the government's move of not putting the tax cap in the Constitution amendment Bill. The TMC and the BJD have already extended their support.
Jaitley is also trying to get SP on board in this regard. The 1 per cent additional tax on inter-state sales was proposed as manufacturing states like Gujarat and Tamil Nadu were of the view that after having spent money on putting up infrastructure, they would lose out on revenue as GST is more of a destination tax.
GST would subsume all indirect taxes like excise, sales and service levies. In the new regime, there will be one Central GST or C-GST and State GST or S-GST. States levy sales tax or VAT on goods sold within their jurisdiction and get a Central Sales Tax (CST) on sales made outside their territories. This CST will no longer be available in the new regime and a 1 per cent additional tax was proposed to make up for that.