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Rajya Sabha passes the GST bill with absolute majority

After nearly two years of utterly divisive politics, consensus returned to the Rajya Sabha and marked the end of a seven hour long debate over a Bill to amend the Constitution to facilitate rollout of the historic GST; finally, it was passed with 203 votes in favour and none against.

The consensus carried the day even as Union finance minister Arun Jaitley did not give the two specific assurances that the opposition Congress had demanded during the course of the debate as a sort of ‘condition’ for supporting the bill. Making the demands on behalf of the opposition former finance minister P Chidamabaram had sought as assurance that the highest GST tax rate shall be capped at18 percent and the two bills — the Central GST and the Integrated GST that the government has to bring in the next winter session to facilitate the GST roll-out — shall be finance bills needing a specific sanction by the Rajya Sabha.

Despite repeated attempts to seek specific assurances, Jaitley would only go to the extent of promising that the tax rates shall be “as low as possible” and that the Rajya Sabha would be consulted as per the constitutional requirement. However, all the parties supported the bill and participated in the voting, except the AIADMK which has reservations on the law. Six official amendments, including scrapping of one per cent additional tax, moved by the government were approved with cent per cent votes.

The bill was passed by the Lok Sabha earlier. It will now go back to the Lower House to incorporate the amendments approved by the Rajya Sabha.

The bill will also have to be approved by 50 per cent of all the state assemblies.

In his forty five minute long response to the debate, Jaitley broadly expressed his agreement with the concerns about the federal structure of the constitution and the tax rates. He explained that the present tax stricture entails an aggregate tax rate of about 30 percent on most of the goods and services, and most states are concerned about the impact it will have on their resource conditions if this is brought down to 18 percent. But we are entering into an era of “pooled federalism” in which the states and the centre shall be together empowered to take taxation decisions.”No state government would be willing to impose a tax that is more than necessary or else it would be voted out,” he said.

Mumbai’s concerns addressed: The union finance minister Arun Jaitley made a special reference to the concerns of the Mumbai Municipal Corporation as the GST law would subsume the octroi and entry tax which are the mainstay of this largest earning local body in the country’s financial hub. “I have discussed this issue with chief minister Devendra Fadnavis and we shall take steps in the Central GST to ensure that the Mumbai Municipal Corporation is not starved of funds,” he said. Earlier both the Shiv Sena members — Sanjay Raut and Anil Desai — had harped on the loss of revenue that the introduction of GST would entail for the local body ruled by their party.

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