With parliament set to meet on Monday, Finance Minister Arun Jaitley met this morning with top leaders of the opposition Congress to persuade them to approve the national sales tax or GST.
Mr Jaitley has said the GST (Goods and Services Tax) will add up to two percentage points to economic growth once it replaces a tangle of state and central levies.
The monsoon session of parliament has just 20 working days and the tax reform has pride of place on the government’s agenda.
This week, Mr Jaitley and new Parliamentary Affairs Minister Ananth Kumar have together been working on the Congress by negotiating changes with Ghulam Nabi Azad and Anand Sharma. The group met at parliament this morning.
The GST proposal has cleared the Lok Sabha, but is stalled in the Rajya Sabha, where the Congress still has the most seats, despite gains by the ruling BJP after wins in recent state elections.
With the help of its allies and regional parties like Mamata Banerjee’s Trinamool Congress, the government could likely push through the GST reform, but sources say it would prefer consensus. There’s also the fact that for the proposal to be voted on, the Congress has to allow the Rajya Sabha to function and refrain from daily disruptions, a practice used by it in recent sessions to stall legislation.
The Congress has been seeking three major changes. It wants the government to cap the GST rate at less than 20 percent and state the limit in a constitutional amendment. The government says this means each time the rate has to be revised, the constitution would have to be amended again. The Congress has reportedly compromised on this point.
The Congress wants the government to scrap a proposed 1 percent additional levy on the cross-border transport of goods – a move designed to compensate states that are skewed towards manufacturing. Its third big demand is that the Finance Minister enlarge the powers of a council to resolve disputes on revenue-sharing between states. On these factors, the government has indicated it will accept the Congress’ stand.