Will the deadlock on GST finally end ?

Dated 4th November, 2015

The National Democratic Alliance (NDA) has signalled its willingness to reach out afresh to the Congress party, despite their bitter confrontation, to forge a consensus for the passage of a constitutional amendment to roll out the goods and services tax (GST) legislation.

In an interview to Bloomberg on Tuesday, Union finance minister Arun Jaitley said that the NDA “was willing to speak to any of their (Congress) leaders including its vice-president Rahul Gandhi to break the impasse”.

But given the heightened tensions between the parties on the issue of “increased intolerance” under the NDA regime, it remains to be seen if the Congress will reciprocate to such an overture.

On Tuesday, while the Congress party led by president Sonia Gandhi presented a memorandum to the President claiming that a sinister campaign is being conducted by forces close to the NDA government to create social tensions, Jaitley countered the allegations by saying that there is no intolerance in India and asked the opposition to fight political battles “politically”.

GST is set to miss its implementation date of 1 April 2016 after the government failed to garner the opposition’s support for the passage of the constitution amendment bill in the monsoon session of Parliament. The government is now pinning its hopes on the winter session slated to start from the third week of November to get the bill passed.

Support of opposition parties like the Congress will be crucial for the bill’s passage in Rajya Sabha where the opposition has two-thirds majority.

However, the Congress is insisting that it will support the bill only if its demands for changes in the present version of the bill are met. The Congress party is demanding that the government should do away with the additional 1% tax that will be levied over and above the GST rate. In addition, it wants that a GST rate of around 18% be included in the bill itself. It also favours reinstating a clause on the dispute resolution authority.

Anticipating that the constitution amendment bill will get passed in the winter session, the government has finalized three draft legislations on central GST, state GST and integrated GST. State finance ministers are set to meet on 20 November to approve these bills.

GST aims to economically unify the country by removing barriers across states and make India a common market for goods and services.
Given the transactional nature of the tax, the government is targeting to implement GST at the beginning of any month in 2016.

(This article is published in Live Mint on 4th Nov, 2015)