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GST: Govt panel for removing tax on inter-state trade


New Delhi: To achieve a middle path on the long due Goods & Services Tax (GST) bill, a government panel headed by Chief Economic Adviser Arvind Subramanian suggested the one per cent additional origin tax for manufacturing states recommended to be levied on the GST, specifically on the inter-state trade of goods to help manufacturing states. This is one of the foremost demands of the Congress and the suggestion might help the BJP-led NDA Government to crack this gridlock in Parliament.

In a report submitted to Finance Minister Arun Jaitley on Friday by the authorised committee recommended changes on the main GST rate to be in the range of 16.9-18.9 percent. The rates endorsed a revenue-neutral rate (RNR) of 15-15.5 percent, with an average rate of 17-18 per cent, should be levied on majority goods and services.

The average rate will be implemented on majority goods and services in the new indirect tax regime. These tariffs were deliberate after eliminating real estate, electricity, alcohol and petroleum products.

The demands put forth by Congress’ comprise 18% GST rate to be legislative and doing away with 1% additional origin tax for manufacturing states- Gujarat, Maharashtra and Tamil Nadu. They had also demanded an independent dispute resolving body for GST.

“The idea of not putting rate caps (of 18% as suggested by Congress) in the Constitution is pragmatic, considering the dynamic business environment which may demand future changes in the GST rate. Recommendation towards wider coverage of sectors (including petroleum) within GST is much desirable in the interest of a cleaner indirect tax regime,” said Rajeev Dimri, leader, indirect tax, BMR & Associates LLP, to a newspaper.

The Constitution Amendment Bill, prevalently recognized as the GST bill, is pending approval in the Rajya Sabha due lack of the majority of the leading government. The government is nonetheless working towards negotiating and finalizing the work by March 31 next year to enable GST’s roll out from April 1, 2016.

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For Modi, Road To 2019 Will Be Steeper

Perhaps the BJP's only solace at the moment is that its opponents haven't been able to get their act together

Prime Minister Narendra Modi. Wikimedia
  • Many believe that Modi and BJP are now no longer is a favourable place
  • The new policies are not getting public approval
  • If situation isn’t handled carefully, 2019 elections will be steeper for BJP

For the Bharatiya Janata Party’s supporters, the growing belief that the party is no longer as favourably placed as before must be both bewildering and disheartening.

They must be wondering what could have gone wrong when the BJP was looking forward to not only a comfortable victory in 2019 but was also planning to celebrate the 75th year of India’s independence in 2022.

Is the Modi-magic vanishing?  Wikimedia Commons
Is the Modi-magic vanishing? Wikimedia Commons

The talk of a “New India” under the BJP’s near-permanent control was in the air with both Nitish Kumar and Omar Abdullah from two opposite sides of the political spectrum saying that Narendra Modi faced no challenge.

Yet, the scene has changed. What is more, it has happened so over a rather short period of time. Among the reasons for it may be the BJP’s electoral setbacks in, first, the Chitrakoot assembly byelection in Madhya Pradesh in November last year, the near-defeat it faced in the Gujarat assembly polls in the following month and finally the huge margins by which it recently lost three byelections in Rajasthan.

Before these contests, the successes of the Congress’s student wing in the Delhi University and of a leftist union in the Jawaharlal Nehru University student union elections over the Akhil Bharatiya Vidyarthi Parishad (ABVP), the saffron brotherhood’s student wing, were significant pointers to the emerging trends.

BJP will definitely see a tough time in 2019 elections. Wikimedia commons
BJP will definitely see a tough time in 2019 elections. Wikimedia Commons

The new scenario has now led to conjectures about a fall in the BJP’s number of Lok Sabha seats to 200/220 from the present 282 in a House of 545. Since these figures have been mentioned by a saffron scribe, it is obvious that assessments on these lines are currently on in the BJP. Another scribe has identified the absence of effective speakers other than Modi as one of the factors behind the BJP’s slide in popularity.

Perhaps one of the first to say openly that the Modi magic was fading was a Shiv Sena spokesperson, who also noted the change in Rahul Gandhi’s “body language” and his transformation into a credible leader. Not long after, the Sena decided not to align with the BJP in 2019.

Also Read: Editorial Freedom Should be used Wisely in Public Interest says PM Narendra Modi to Media

The BJP’s old ally is not the only party to begin thinking of greener pastures. The Telugu Desam Party, too, has expressed its displeasure over the “neglect” of Andhra Pradesh in the Union budget. To forestall a rupture, the BJP has offered the Shiv Sena 144 seats in Maharashtra in an assembly of 288 seats, but the generous gesture is more indicative of the BJP’s nervousness than of magnanimity.

So, what went wrong for a party which was riding high during the first three years of its tenure?

First and foremost reason is its failure to usher in the promised “achhe din” or better days because of a sluggish economy. The scene might have been better but for the twin blows of demonetisation, which dealt a blow to small businesses, and the shambolic rolling out of the Goods and Services Tax (GST), which also unsettled the traders and businessmen.

It seems unlikely BJP will be able recreate its historic win in 2019 elections. Wikimedia Commons
It seems unlikely BJP will be able recreate its historic win in 2019 elections. Wikimedia Commons

The second reason is the widespread rural distress which eroded the BJP’s influence in Gujarat. As a party essentially of urban lower middle class areas, the BJP’s connection with the countryside has never been very strong. In its Jan Sangh days, the party once even forgot to adopt a resolution on agriculture till the lapse was noticed at the last minute.

Modi is now said to have sought the advice of farming experts to reach out to the cultivators. But the move is unlikely to pay immediate political dividends.

To compound the BJP’s problems, the Bharatiya Mazdoor Sangh (BMS), the Sangh Parivar’s labour wing, has raised the red flag over the “disappointing” Union budget.

Also Read: PM Narendra Modi: Government bringing Stringent Consumer Protection Law

Another explanation for the BJP’s woes is undoubtedly the inability to control the saffron goons, who have been running amok to impose their diktats on diet, inter-faith romance and film scripts, among other things.

The rampages of the cow vigilantes have hit the meat and leather industries and resulted in ageing cows being let loose by their owners to roam the countryside and city streets to forage on their own. Hence the proposal to impose a fine on the “guilty” owners.

The result is the prevalence of an atmosphere of intolerance of the kind which made a section of the intelligentsia return the awards which they had once won in protest against the deteriorating state of affairs in the country.

Prime Minister, Narendra Modi 's new policies are not being received well by the public.
Prime Minister, Narendra Modi ‘s new policies are not being received well by the public.

Perhaps the BJP’s only solace at the moment is that its opponents haven’t been able to get their act together. Moreover, the fissures in their ranks are palpable with a rift in the Communist Party of India-Marxist (CPI-M) over whether to align with the Congress in an anti-BJP front, and the Bahujan Samaj Party (BSP) teaming up with the Janata Dal (Secular) in Karnataka on the eve of the assembly elections.

There are also said to be reservations among the senior opposition leaders about accepting Rahul Gandhi as the leader of an alliance.

Karnataka will be the next big electoral battle for the BJP. If it can dislodge the ruling Congress in the state, it will be able to brush aside the party’s setbacks in Gujarat and Rajasthan. Otherwise, the road to 2019 will seem steeper. IANS