GST rate turns stumbling block

Jaitley argued against cap in Friday's meet

Capping the Goods and Services Tax (GST) rate at 18 per cent seems to be the biggest stumbling block as the government and the Congress began internal deliberations to break the deadlock in Parliament over the roll-out of the new indirect tax regime.

It is now learnt that Congress president Sonia Gandhi did some plain speaking at the meeting called by Prime Minister Narendra Modi on Friday evening, where Finance Minister Arun Jaitley and Parliamentary Affairs Minister M Venkaiah Naidu were also present.

Jaitley gave a historical background of the GST Bill which was first introduced by then finance minister Pranab Mukherjee and later followed up by his successor P Chidambaram.
Congress vice president Rahul Gandhi called Mallikarjun Kharge, the party leader in the Lok Sabha, for discussions on the GST and Parliamentary agenda for the week.

In-principle approval

“Soniaji said that in principle they support the bill. Just a few changes need to be made. I am optimistic,” said Naidu on Saturday when asked about Friday’s meeting.
There were indications that the government was open to assess the impact of abolition of the 1 per cent additional tax and setting up of a separate dispute settlement mechanism, two key demands of the Congress.

However, there were strong reservations to capping the GST rate at 18 per cent and mentioning the figure in the Constitution 122nd Amendment Bill. Jaitley is learnt to have strongly argued against capping the GST rate and even pointed out that Mukherjee and Chidambaram had also not found it fit to mention the rate in the bill.

Sources did not rule out the government giving an assurance in Parliament that the GST rate would be capped at a certain point which may not be as high as 27 per cent as perceived by the Congress.

Meanwhile, Minister of State for Finance Jayant Sinha on Saturday said he was hopeful that the GST Bill would be passed by Parliament soon. Modi and Jaitley have said that they were keen to roll out the GST regime from April 1.

Industry representatives have held separate meetings with Union ministers as well as Congress leaders to convey their anxieties over the delay in implementing GST.