AIADMK opposes GST bill even as MoF releases model GST law

In what can be termed as a major step towards constitutionalising the GST bill, the Ministry of Finance on Tuesday released a draft for the model Goods and Services Tax (GST) law, for consultation amongst the general public.

An important meeting took place in Kolkatta on Tuesday  chaired by Finance Minister Arun Jaitley with counterparts of 22 states and representatives of seven other states. GST panel head and Finance Minister of West Bengal Amit Mitra, who was also present for the meeting on Tuesday, has been entrusted with a daunting task of building a consensus on GST bill, taking into confidence all the federal states in India on the benefits of GST.

The draft of GST model law was released post the meeting; and the next meeting was announced to be held in the second week of July to take matters forward. Amit Mitra announced that the next meeting to be held in July will allow discussion on the revenue neutral rate (RNR).

Arun Jaitley confirmed that a fixed GST rate or a cap on GST rate  will not be a part of the constitution and that there is a consensus amongst states on keeping GST rate out of the constitution. Congress has clearly opposed this very decision and wants the GST rate to be fixed and capped at 18 per cent for all products. Congress has also urged for an independent body to resolve revenue sharing disputes between states, to which the BJP does not agree. 

According to Arun Jaitley almost all states are in consensus and that only Tamil Nadu has some concerns over the GST bill being constitutionalised. 

Tamil Nadu CM Jayalalitha has reiterated her reservations on GST bill to PM Narendra Modi in the meeting on Tuesday  and suggested that the GST bill will impact the fiscal autonomy of a state like Tamil Nadu. Several amendments have been recommended by the AIADMK leader including a request to permanently keep out the petroleum products from the GST bill. 

The ambitious GST bill is expected to replace almost all central and state level indirect taxes. The reformist move may lead to lower taxes, eliminating taxes on tax and facilitate tax compliance and widen the tax base.