Moving a step further in line of rolling out a single rate Goods and Services Tax (GST) by April 1, 2016, the Union Cabinet has approved amendments as proposed by Rajya Sabha Select Panel on GST Constitution Amendment Bill. The Cabinet meeting, chaired by Prime Minister Narendra Modi, agreed to the recommendation made by the Select Committee on compensation to states to win over support of regional parties.
The Rajya Sabha Select Committee, headed by BJP’s Bhupender Yadav, in its report submitted to the House has suggested changes in clauses pertaining to compensation and levy of 1 percent additional tax by the states on inter-state supply of goods. The Cabinet decided that the modalities for levy of 1 per cent tax over and above the GST rate by states as well as the 'band' rate would be finalised while framing the rules.
The committee has recommended that the provision in the Bill that provided Centre “may” compensate states for a period up to five years for any revenue loss be substituted by a commitment for compensation for five years. The amendment approved by the Cabinet on compensation seeks to give an assurance to states for making up for revenue loss they may suffer in first five years of introduction of GST.
The select panel, however had retained the representation of the Centre and States at the proposed level at one-third and two-third despite demand to reduce Centre’s representation to one-fourth. The final GST rates would be decided by the GST Council, chaired by Finance Minister, with Centre having one-third votes and states together having two-third votes.
