GST - No State will lose a rupee of Revenue - FM
INTRODUCING the Constitution Amendment Bill popularly known as the GST Bill in the Lok Sabha on Friday, Finance Minister Arun Jaitely said,
In fact, let me remind the hon. Members that this Bill, in the context of how taxation is to be levied, has earlier been introduced. It has been cleared by the Standing Committee. It has been the good luck of this Parliament and the country that conventionally West Bengal was the greater supporter of this Bill. Therefore, if there is any change in thinking, I do not know. In fact, it was the effort of Shri Asim Das Gupta, who conferred not only with Chief Ministers but also with me on some occasions when I was the Leader of Opposition in order to mobilise support for this Bill.
On substance, I have just two things to say to allay any fear that you have. It was mooted in 2006 by the UPA in its Budget, and was originally conceived by Vajpayee ji. It was pushed by both the UPA Finance Ministers. The object behind the GST is to have a seamless transfer of goods and services across the country. Let there be no tax on tax. So, if you have multiple taxations imposed, the burden and the procedural complications increase. On the destination principle, the tax is at the last stage.
Now, one legitimate fear was there. Therefore, I am not going to rush through with this, as Shri Mahtabji has said, though the Standing Committee has cleared it, though I have discussed it repeatedly, though Shri Chidambaram has discussed it repeatedly with the Empowered Committee and the State Governments. I have met several Chief Ministers and Finance Ministers, and discussed this issue with them individually also.
We have added several safeguards to this. I called a meeting on the last occasion on Friday. The Finance Ministers expressed some three or four points of concern. Then a smaller group came and met me, which comprised of people from various political parties. But they came really speaking in one voice.
These meetings went on for hours together. Thereafter, they wanted some change in the language which was to give more liberal rights to the States. I acknowledged that request. Even now, the intention is not to push it through. Whether a Standing Committee is again required or not required is a separate issue. But we want this to be debated after it is introduced, after the Draft to be out so that if anybody has any suggestion to offer. I am willing to accept that. We have made sure that no State will lose a rupee of revenue. It will be a win-win situation where they will gain.
Amongst the other factors, I will just give you three factors. Service tax is entirely in the domain of the Centre today. It is going to be shared with States now. Places like Maharashtra, from where one-third of the national service tax comes, will benefit. When we share it with them, it more than takes care of the octroi absorption into the GST. Additionally, we will make sure that for some period, two years, a one percent additional tax is permitted to the States. Even then, the consuming States are all going to benefit. If some producing State, for some period, loses some money, in the Constitution Amendment itself, I have provided that for five years, there is a mechanism. For the first three years, it is there entirely and then it is on tapering basis. The Centre will assure them to compensate them for any loss which has been suffered.
As far as the past is concerned, from 2010 to 2013, the CST compensation which was payable to the States, amongst the various debts which have been left behind on my table by the UPA, this is one of them. They have not paid it. In the discussion on the Demands for Supplementary Grants, I have already said that I intend to honour that commitment which the UPA had made. Therefore, the first instalment in that repayment also, I will try to pay in this financial year itself. So, we will make sure that no State loses. All the States are going to gain more.
When the Bill is take up for discussion, perhaps in the next Session, we will make sure that the interest of every State is well looked after in this. I will be open to all suggestion till the very last minute.
Therefore, just as in the case of VAT, which was the fear of the unknown that will go down, the Centre benefited, the States benefited. I have not the least doubt that both will benefit even in this case. Once both the Houses of Parliament approve this and this becomes a law, certainly, with the approval of the States, we will address the concerns of each one of those States. This is not a partisan piece of legislation. When the UPA Government brought it in, you have had persons from the CPM, the BJP and the National Conference as Chairpersons. The States are certainly concerned about their rights.
We will ensure that their rights are preserved. No State is a loser.
And the Bill to amend the Constitution of India (for the 122nd time) was introduced in the Lok Sabha