The key legislative highlight from last month was the passage of the GST constitutional amendment Bill. The bill marks a shift in the indirect tax regime in our country. The indirect tax system is currently plagued by issues such as multiplicity of taxes, cascading effect, low compliance etc. The new regime proposes to be a unified comprehensive indirect tax system subsuming various central, state and local taxes. Further it provides for an input credit system that would incentivise tax payers and help compliance.
The Bill was pending in Parliament since 2014, and was finally cleared by Rajya Sabha on August 3, 2016 with certain amendments. The amendments incorporated during the passage of the Bill in the Upper House were a result of political negotiations and consensus building.
The 2014 Bill included an additional tax up to 1% on the supply of goods to be levied by the central government in the course of inter-state trade or commerce. This provision was amended to omit the additional tax. Further, the amendment made by Rajya Sabha has also made it mandatory to compensate states for any loss of revenue for a period of full five years. Since taxation is a subject that both the Centre and State can legislative on, for the amendments made by this bill to be incorporated in the constitution it required a minimum of 15 states to agree to them.
The second half of August, saw the focus shift to the state legislative assemblies as they took up the bill passed by parliament for ratification. So far 16 state legislatures including those of Assam, Bihar, Jharkhand, Himachal Pradesh, Chhattisgarh, Gujarat, Madhya Pradesh, Delhi, Nagaland, Maharashtra, Haryana, Telangana, Mizoram, Sikkim, Goa, Andhra Pradesh have ratified the Bill. The President gave his assent to the Bill today.
The coming months will be critical for rolling out GST. After having received presidential assent, the GST council comprising representatives of the Centre and state will have to be set up. The Council will deliberate and make recommendations on the operational modalities of the new tax. The Council is also responsible to draft the model Central GST (CGST), Integrated GST (IGST), and model State GST Bills. Subsequently, the Centre will have to clear the CGST and the IGST Bills while each state will have to pass their own State GST Bills. To meet the target of implementation of GST by April 2016 state assemblies and Parliament in the upcoming Winter sessions will have to run smoothly and pass these bills.
Apart from the legislative development around GST, 13 other bills were cleared by Parliament in the Monsoon Session. These were related to amending the SARFEASI Act to address issues related to debt recovery, setting up of compensatory afforestation funds, prohibition of child labour, among others. Some other Bills related to the health sector like those related to maternity benefits, mental health care were also passed by one House and may see movement in the next session.
In addition, two key bills were introduced in Lok Sabha during the last session. These were the Motor Vehicle (Amendment) Bill, 2016 and Transgender Persons (Protection of Rights) Bill, 2016. The Motor Vehicles Bill has been referred to a Standing Committee for detailed scrutiny.
The Motor Vehicles Bill regulates road safety, provides for compulsory insurance cover to all road users. Penalties for certain offences have also been increased. The Transgender Bill defines a transgender person and prohibits their discrimination in the areas of employment, health and education. Further, the bill states that government will take appropriate welfare measures to ensure full inclusion of transgender persons in society.
Given that Parliament was in session, the last month saw key legislative developments. Going forward committees will scrutinise bills referred to them, hold public consultations which will lay out the groundwork for debate in the House during the Winter Session.
- Written by Trina Roy.
Trina is a Program Officer at PRS Legislative Research.