After being mired in dispute for a long time over Centre-state tussles and political partisanship, the Goods and Services Tax (GST) Bill seems to be making headway.
After finance ministerPranab Mukherjee relentlessly worked behind the scenes to narrow down differences with Opposition-ruled states, sources said the bill was likely to be put before the Union Cabinet on. The bill will then be moved in Parliament on August 26, a timeline fixed by Mukherjee late after making changes in the initial draft to the satisfaction of all states.
The indirect tax reform will streamline movement of goods and services across India with a single tax structure replacing the existing VAT, service tax, excise duties and central sales tax among others. The proposed reforms will not only integrate the country economically but should also ensure cheaper goods once the multiple tax structure is abolished.
On the issue of the Centre retaining veto in the proposed GST Council, which will govern all indirect tax issues in the future, sources said Mukherjee had agreed to incorporate a clause that gives veto power to all states. Any issue relating to GST will have to be agreed upon by all states once the bill is passed by Parliament by a two-thirds majority and by at least 15 assemblies. The Centre has also agreed to insert a clause that provides liberty to states to disagree upon any diktat from the Council.
Left-ruled Kerala, all BJP-ruled states and two Congress states had rebelled against initial draft of the GST Bill, questioning the veto power to Centre as an infringement on their autonomy. The back channel diplomacy of Mukherjee, where a major role was played by West Bengal FM Asim Dasgupta, was able to convince states to develop a consensus before the scheduled meeting of the empowered group of state FMs on August 18 when the decision will formally be conveyed to the Centre.
Another departure from the original draft is a clause that provides for setting up of a Dispute Resolution Authority. In the revised draft, It is not mandatory anymore.
