GST Bill- introduce in current Parliament session by the cabinet

Dated 1st December, 2014

Finance minister Arun Jaitley on Monday expressed hope that the much-awaited goods and services tax (GST) Bill, which provides for a uniform indirect tax structure, would be introduced in the current winter session of Parliament.

“We will try and introduce GST Bill in this session...GST Bill would be taken up by the cabinet after empowered committee (of state finance ministers) meeting on 12 December,” Jaitley said in New Delhi. The government has proposed to implement GST from 1 April 2016, and the new finance commission may be set up ahead of its schedule to look into the issues related to the new indirect tax regime.

The GST will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies. There are differences between the Centre and states on some issues with regard to the implementation of GST that includes the revenue neutral rate and keeping petroleum, liquor out of the ambit.

While a sub-committee on GST has suggested that the revenue neutral rate of GST be pegged at about 27%, the states are yet to decide on it. It had suggested states GST at 13.91% and central GST at 12.77%. Besides, states have been demanding that petroleum, alcohol and tobacco should be kept outside the purview of GST.

The GST constitutional amendment Bill, which was introduced in the Lok Sabha in 2011, had lapsed and the National Democratic Alliance (NDA) government will be required to come up with a fresh Bill. The GST rollout has missed several deadlines because of lack of consensus among states over certain crucial issues on the new tax regime.

Need to encourage M&As Mergers and acquisitions have to be encouraged to promote the size of domestic companies but there is also a need to understand when to draw the red line while implementing the competition law, said Jaitley.

He also underlined the need for applying the “principle of proportionality” while taking into consideration the consequences of competition norms. “People learn from global experience. When our own corporates are of moderate size, mergers, acquisitions and consolidation need to be encouraged to promote size. So when it is that we draw the red line (in implementing competition law),” Jaitley said.

According to him, Competition Commission of India (CCI) is becoming “extremely mature”. M&As involving significant business activities and those meeting a certain threshold under competition norms are required to get clearance from CCI. Jaitley was inaugurating the International Competition Network merger workshop, organized by CCI.

“Another issue, what are the kind of consequences and penalties that we impose in the larger implementation of the law. Do we look at the evil sought to be curbed (or) the capacity of our own economy and therefore apply the principle of proportionality,” the minister said.

Emphasizing that people learn from global experiences, Jaitley said “jurisdiction” is emerging with regard to common turf issues on account of multiple regulators. “If two telecom majors are to amalgamate, will there be common turf areas between the telecom regulator and market regulator CCI. Therefore how do you built the jurisdiction of the two. Obviously jurisdiction in this area is emerging,” he noted.