GST bill gets Cabinet nod, likely to be tabled in Parliament this session

[The Huskar]

but it has to be passed by both RS and LS with in six months right? How are they going to achieve it?

I think they may try the joint session route.

 

[NKVD]

but it has to be passed by both RS and LS with in six months right? How are they going to achieve it?

Firstly No,
Often though Ordinances are used byirstly governments to pass legislation which is currently pending in Parliament, as was the case with the Food Security Ordinance last year. Governments also take the Ordinance route to address matters of public concern as was the case with the Criminal Law (Amendment) Ordinance, 2013, which was issued in response to the protests surrounding the Delhi gang rape incident.

Since the beginning of the first Lok Sabha in 1952, 637 Ordinances have been promulgated. The graph below gives a breakdown of the number of Bills passed by each Lok Sabha since 1952, as well as the number of Ordinances promulgated during each Lok Sabha.

Article 123 of the Constitution enables the President of India to promulgate an ordinance if neither House of Parliament is in session and “circumstances exist, which render it necessary for him to take immediate action”. Every ordinance has to be laid before Parliament, and ceases to exist six weeks from the end of the next sitting of Parliament. Since the Constitution mandates that Parliament be called into session at least once every six months, ordinances have a de facto expiration period of approximately seven and a half months. Article 213 gives the same power to the Governor of a State.

Ordinance-making power is not a new feature added to the Indian Constitution. Articles 42 and 43 of the Government of India Act, 1935, gave the same power to the Governor General. Members of the Constituent Assembly, having experience of abuse of such power, were understandably wary of including the same in the Constitution. Both Hriday Nath Kunzru and Professor K.T. Shah called for restricting the executive’s power to promulgate ordinances through greater oversight by legislatures. They were, however, overruled by Dr B.R. Ambedkar, who stated that ordinance-making powers were necessary since existing law might be deficient to deal with a situation “which may suddenly and immediately arise”. According to him, the only solution was to “…confer upon the President the power to promulgate a law which will enable the executive to deal with that particular situation because it cannot resort to the ordinary process of law…” when the legislature was not in session.

It is considered one of the important legislative powers of the President, however is subject to limitations like


i. An ordinance may be issued by the President only when one House is in session.

ii. An ordinance may be made under circumstances which require immediate action.

iii. An ordinance can be made only on subjects on which Parliament can made laws and is subject to the limitations, to which a Parliamentary law is subjected.

iv. An ordinance needs to be present before the Houses of Parliament who reassembles. An ordinance ceases to operate on the expiry of six weeks from the reassembly of Parliament. If the Houses reassemble on different date the period of six weeks is calculated from the later of those dates. Without being approved by the Parliament and ordinance can last for a maximum period of six months and six weeks. All acts done and completed under an unapproved ordinance will lapse.

The President may withdraw an ordinance at any time. However, the President exercises the power on the advice of the Council of Ministers headed by the Prime Minister. An ordinance may have retrospective effect and may be modify repeal any act of Parliament or even another ordinance. It may also amend or alter a tax law but never can be used to amend the Constitution.

This unusual power has been given to the President, so that the Executive can deal with a situation of urgency.

Secondary Route to pass bills in Parliament

The Rajya Sabha has equal footing in all areas of legislation with Lok Sabha, except in the area of supply, where the Lok Sabha has overriding powers. In the case of conflicting legislation, a joint sitting of the two houses is held. However, since the Lok Sabha has twice as many members as the Rajya Sabha, the former would normally hold the greater power. Only three such joint-sessions have been held; the latest one for the passage of the 2002 Prevention of Terrorism Act.


Thirdly,There are certain limitations, which makes Lok Sabha more powerful than Rajya Sabha.

In case of Financial bills, if the Rajya Sabha returns the bill to Lok Sabha, opposing the bill, it is deemed to have passed . Though the Rajya Sabha can send recommendations to the Lok Sabha, it is not binding on the Lok Sabha to act on it. Also, the house cannot exercise Pocket Veto; if the house does not pass the bill within 14 days, it is again deemed to have been passed by the house.

No-Confidence Motion

Unlike Lok Sabha, it cannot pass motion of no confidence against the government.

Legislation

The number of members of Lok Sabha is 545, that is more than twice the members of Rajya Sabha. As a result, in case a non-financial bill is rejected by the Rajya Sabha, if passed by the Lok Sabha, then in the joint-session of the parliament, the bill is likely to be passed. So, in general, the Lok Sabha has more power than Rajya Sabha in matters of legislation.

 

[Soumitra]

In case of Financial bills, if the Rajya Sabha returns the bill to Lok Sabha, opposing the bill, it is deemed to have passed . Though the Rajya Sabha can send recommendations to the Lok Sabha, it is not binding on the Lok Sabha to act on it. Also, the house cannot exercise Pocket Veto; if the house does not pass the bill within 14 days, it is again deemed to have been passed by the house.

Wont GST be considered a Financial bill and passing it in Lok Sabha be enough even if there is opposition in the Rajya Sabha?

 

[NKVD]

Wont GST be considered a Financial bill and passing it in Lok Sabha be enough even if there is opposition in the Rajya Sabha?

Yes,But Firstly Bill has to be introduced in Either of the houses.Which According to Latest Reports Confirmed by FM will be Done in Next Budget Session.

 

[Darmashkian]

Good :- According to Headlines Today- TMC will support the GST Bill.

 

[anonymus]

I think they may try the joint session route.

No, It is a constitutional amendment bill.

Wont GST be considered a Financial bill and passing it in Lok Sabha be enough even if there is opposition in the Rajya Sabha?

Yes and No.

While GST in itself will be a Financial bill, but in order to introduce it, a separate constitutional amendment bill has to presented along with it ( not separately ). Thus the whole bill require 50% majority separately in both houses.

It is like Judicial appointment bill. While bill describing composition of Judicial appointment committee was an ordinary bill, but bill stating that there would be a committee was a constitutional amendment.

 

[The Great One]

BJP is sure taking its sweet time introducing this bill since only 7 days are left of the winter session.


GST was the brainchild of Congress and thus we can expect some leniency from Congress on this bill.

BJP/Modi however opposed it in opposition and now the result is this


The best of goods & services: GST being negotiated has too many exclusions, we must build consensus on a flawless version

If there is one policy reform on which there is consensus, it is the Goods and Services Tax (GST). Yet, as negotiations between the Centre and states reshape this important reform, continuous reassessment is warranted.

If we were to implement the flawless GST as originally recommended by the task force of the 13th Finance Commission (TFC), the gains would be immense. The latter had recommended that India replace myriad central and state indirect taxes by a single uniform value added tax on substantially all goods and services. With the combined indirect tax revenue of the Centre and states a tad below 11%, allowing for a handful of exceptions, the TFC taskforce had pegged the uniform GST rate at 12%.

Taxation at this rate would mean that the taxpayer would not have to pay an unusually high tax on any single commodity or service. The burden will be spread evenly across different goods and services consumed. The single rate would also eliminate production inefficiencies since it would tax value added at each stage of production at the same rate.

As a byproduct, since the GST would be collected at the point of sale rather than production, it will serve to unify India into a single market. There would no more be need to erect border check posts to collect taxes on goods produced in one jurisdiction but sold in another.

Unfortunately, it is now increasingly clear that we are not heading towards a flawless GST. Both states and the Centre have lists of goods and services that they appear determined to exclude from the tax base. State lists differ from one another and also from that of the Centre.

Almost all states want such important sources of indirect tax revenue as petroleum and alcohol excluded from the GST base. Besides food items, education and health services are also likely to be excluded wholly or partially. Then there are exclusions based on the turnover of a company. The Centre does not tax companies with a turnover less than Rs 15 million while the exemption thresholds across states range from Rs 5 lakh to Rs 6 million.

So significant are the proposed exclusions that a recent sub-panel set up by state governments estimated that revenue-neutral GST rates would be 12.77% for the Centre and 13.91% for the states. Together, these rates would sum to 26.68%, more than twice the 12% rate that the TFC task force had recommended. Admittedly, the 26.68% rate is the highest of all estimates of revenue-neutral rates offered to-date. Nonetheless, the estimates have been uniformly significantly above the 12% mark.

If excluded items and companies render the GST tax base small and, thus, require the revenue-neutral GST rate to be excessively high, the benefits of the new system would barely justify its costs. A shift to the new system would impose significant transition costs since all states and the Centre would need to move to a common GST infrastructure that would require all taxpaying companies to file their returns and deposit taxes electronically.

GST has also been a source of “attention diversion cost”. The inordinate amount of time spent negotiating it has meant that other reforms have been neglected or delayed.

Above all GST, even when implemented in its flawless form, imposes a major cost on the system by compromising our federal structure of governance. In a true federal system, states and local administrations get to choose the level of spending on public goods and services and are, therefore, accorded powers of taxation. In so far as GST substantially transfers the power to tax to the Centre, it restricts the ability of the states to determine the level of spending on public goods and services locally.

This analysis has two implications for the current approach to policymaking. First, the finance ministry should guard against putting substantially all its eggs in the GST basket. Given the vast exclusions, high GST rate and evasions the high rate would attract, this is not going to be the game-changer reform that was once considered.

There are other reforms India needs that would bring more and certain benefits and would require far less effort and political capital. For instance, in the short run, greater focus on ending the uncertainty associated with taxation, reforming the land acquisition Act and cleaning up the balance sheets of public sector banks would carry significantly higher and more certain returns to the government’s efforts.

Second, if building consensus for a broad GST base takes longer, spending the extra time would be well worth the wait. Indeed, the government may consider a two-step process of implementation.

In the first step, it may implement a fully functional central GST with as wide a base as possible. This would complete an important component of GST without disruption at the level of states. It would also go a long way towards demonstrating to states the Centre’s commitment to GST and its feasibility. In the second step, the Centre can extend GST to states.

This approach would have the added advantage of giving the Centre an opportunity to build and test the robustness of GST infrastructure. After all, a flawless GST also requires a flawless information technology infrastructure.