After the successful passage of the 122nd Constitutional
Amendment Bill, 2014 (Goods and Services Tax (GST) Bill) in the Lok
Sabha (lower house of Parliament), the GST Bill was sent to the
Rajya Sabha (upper house of Parliament). However, due to
disagreement over a few provisions of the GST Bill, it was sent to
the Select Committee of the Rajya Sabha. The Select Committee is
comprised of 21 members and is headed by Bhupender Yadav (Member of
Parliament, Bharatiya Janata Party).
The Select Committee reviewed the GST Bill and submitted its
report on 22 July 2015. In its report, the Select Committee
endorsed most of the provisions of the proposed GST
Bill. However, there were a few dissent notes submitted by
This GST Update summarises the following:
The Select Committee's key recommendations
Dissent notes on the GST Bill submitted by the Congress,
AIADMK and the Left parties
The Select Committee's key recommendations
Revenue of local bodies should not be adversely
The Select Committee recommended that the revenues of local
bodies need to be sustained and protected by the state governments,
to ensure standards of local governance are maintained.
The Select Committee proposed to include the definition
of 'band' in Clause 12 (4)(e) of the GST
Bill. The 'band' may be defined as "The range
of GST rates over the floor rate within which Central Goods and
Service Tax (CGST) or State Goods and Services Tax (SGST) may be
levied on any specified goods or services or any specified class of
goods or services by the central or a particular state government
as the case may be." The definition
of 'band' will provide some flexibility to
states to decide the GST rates (provided the rate is within the
Definition of supply for 1% additional
To avoid cascading of taxes, a definition for 'supply'
is recommended by the Select Committee as "All forms of
supply made for a consideration". Thus, inter-state
supply of goods without consideration (such as stock transfer) will
not attract the additional 1% tax. However, this definition would
be applicable only for the purpose of an additional 1% tax on
the inter-state supply of goods.
Compensation to states
The Select Committee has recommended that revenue loss to the
states should be compensated for a period of five years.
Shareholding in GSTN
The Select Committee recommended that the government should take
immediate steps to ensure non-government financial institution
shareholding is limited to public sector banks or public sector
financial institutions as the GST Network (GSTN) will be a
repository of a lot of sensitive data on business entities.
Banking services should be kept outside the GST net. If
not, then ensure GST credit is available to them
The Select Committee recommended banking services be kept
outside GST as followed by most countries across the
Moderate GST rate
The Select Committee discussed that it was imperative for the
GST Council to keep the needs of consumers in mind and arrive at a
moderate GST rate to secure the confidence of consumers. The
Select Committee also noted that a high GST rate may lead to
inflationary pressure on the prices of products and services.
Dissent notes on the GST Bill by the Congress, AIADMK and the
The GST did receive some contention in the form of dissent notes
from the Congress, AIADMK and the Left parties as shown
The way forward
According to news reports, the Union Cabinet (headed by Prime
Minister Narendra Modi) has approved the amendments to the GST
Bill (including the amendment for compensation to states for
Given the aforesaid, the GST Bill now stands for approval by the
Rajya Sabha. It would be prudent for the Rajya Sabha to prioritise
and expedite the clearance of the GST Bill to ensure the
implementation target date of 1 April 2016 is met.
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