After a marathon debate that lasted nearly seven hours, the Lok Sabha on Wednesday passed four crucial Bills related to Goods and Services Tax (GST) regime in the country. With this the ‘one nation, one tax’ regime inched close to reality.
The Bills — Central GST, Integrated GST, Compensation to States, Union Territory GST — were passed by the Lower House after several amendments moved by the Opposition were negatived. The Bills will now be taken up in the Rajya Sabha.
Putting to rest concerns raised by the Opposition that the four Bills were seeking to bypass the law-making powers of Parliament, Finance Minister Arun Jaitley assured the House that Parliament would continue to have control over the rates and that the GST Council was only required to recommend the rates to the Centre.
“Every time a Finance Minister brings a Finance Bill as part of the Budget, members of the House will have a say on deciding the rates enshrined in the Finance Bill,” he said adding that the GST Council, as per the Constitution, had powers only to recommend rates and that it was only asked to give its views on the model GST law.
On the status of the real estate sector, Jaitley clarified that the Council, which is going to be a permanent body, had taken a decision that the aspect of bringing it under this indirect tax regime would be reviewed in the first year of GST.
On the issue of petroleum products, he said that the Constitution provides that these items would attract GST, though the rate has been kept at zero. Going forward, it would require only an executive decision on setting a rate on petroleum products, he said.
As regards concerns raised by banks and insurance companies over the need for multiple registrations under GST, Jaitley said that a clause has been provided that can provide an exemption in exceptional circumstances and the GST Council will take a call on it.
Earlier in the day ,when moving the Bills for consideration, Jaitley had expressed the hope that States would “honour” the new federal relationship that had been established through the concept of “pooled sovereignty” to usher in the GST system. Any form of unilateralism by any legislative body is possible only in respect of areas that exclusively remained within their domain and not in respect of areas dealing with the GST, Jaitley had noted.
He pointed out that the GST Council was the country’s first federal institution that pools the sovereignty of the Centre and the States in regard to indirect taxes.
“It is now incumbent upon all of us to make this federal institution (the GST Council) work. Therefore, in order to make this federal institution work the delicate balance between what the Centre and the States have unanimously agreed in the federal contract should be maintained,” Jaitley said.
Revenue Secretary Hasmukh Adhia said the four rules that the GST Council will approve are composition, valuation, input tax credit and transitions.