Pranab likely to table bill on GST tomorrow

It will facilitate implementation of a new tax regime that subsumes levies like excise, sales and service tax. The Union Cabinet had given green signal to the bill on the GST and the Finance Minister could table it Parliament tomorrow, sources said.

The Bill is likely to be referred to the Parliamentary Standing Committee for scrutiny. The GST, which is considered as a major tax reform, has been pending for the last four years due to differences between centre and some states over the structure of the new tax regime.

"The decision to table the bill is a positive development. The Finance Minister was committed to bring it in the current session and he is doing that," Ernst and Young Tax Partner Harishanker Subramaniam said. The Finance Ministry has worked on the final draft Constitution Amendment Bill, the fourth since the discussions on the new tax regime commenced.

Earlier, the first three drafts prepared by the Centre were rejected by the states citing autonomy issues. The fourth draft, a hybrid of the second and third draft, has proposed setting up of a modified GST council through a presidential order for taking decisions on all important matters.

In addition, the composition of the GST Dispute Resolution Authority, proposed to be a part of the Constitution Amendment, will be decided by Parliament. Furthermore, petroleum, natural gas, diesel and ATF have been kept out of the GST ambit in the final draft.

Last year, a draft Constitution Bill proposed by the Centre to the states had suggested a council chaired by the Union Finance Minister, with states as members, to make changes in GST.

The states, especially NDA-ruled ones, had raised objections to the proposal, saying it would give veto power to the Union Finance Minister over state taxation issues. The Centre subsequently provided another draft to states, suggesting that changes in GST could be made only if there was a consensus on those issues in the council. However, some state finance ministers did not agree to even this suggestion.

Taking into consideration the states' concerns, the Finance Ministry had then floated a third draft on the GST Constitution Amendment Bill.

The new draft proposed to create a GST Council through an Act of Parliament, instead of a presidential order, as proposed in the previous draft. The Centre had also dropped any reference to the Union Finance Minister heading the GST Council.

After missing the original April, 2010 deadline for GST rollout, the government proposed to introduce it in April, 2011. But it is all set to miss this deadline too. According to Revenue Secretary Sunil Mitra, it may be difficult to implement GST from April 1, 2012, too.

The GST will subsume indirect taxes such as excise duty and service tax at the central level and VAT on the states front, besides local levies.

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