NEW DELHI, 2 AUGUST, 2016: India’s biggest tax reform in decades could become a reality on Wednesday, tomorrow with the main opposition party, the Congress, declaring that it has arrived at “a broad understanding” with the government after months of negotiations.
The government wanted the national Goods and Services Tax or GST to be debated and voted on tomorrow, but the Congress forced a delay to Wednesday because chief Sonia Gandhi and other Congress leaders are campaigning tomorrow in Varanasi, the constituency of Prime Minister Narendra Modi.
The GST Bill was cleared last year by the Lok Sabha, where the government has an easy majority. On Wednesday, it must get the support of two thirds of the Rajya Sabha, which has 243 members. The Congress has the biggest presence with 60 members. With a slew of regional parties backing the reform, the government believes it can get 162 votes – what it needs to turn the proposal into law – even if the Congress is not on board.
But the Congress’ cooperation is needed so that it does not cause disruptions to ensure the bill is not debated – a practice it has exercised in earlier sessions of parliament.
To ensure that, the government has agreed to two boldface Congress demands. A 1% inter-state tax that would be applied by states that manufacture goods has been cancelled. (GST taxes consumption so these states will lose revenue and for five years, they will be compensated by the centre.
The government has also agreed to an independent council that will handle disputes between states over sharing revenue.
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