Difficult to accept Congress demand on GST cap: Arun Jaitley

Finance Minister Arun Jaitley today said it would be difficult to accept Congress’ demand to cap GST rate in a Constitution amendment bill pending in Rajya Sabha even as he remains hopeful of passage of the key bill. He also said that there is scope to improve growth rate with reforms.

“Today, every state government, including all Congress ones, is in favour of Goods and Services Tax (GST). You have every political party in Parliament which has said they will vote in favour,” he said at the India Today Conclave here.

The landmark legislation, the biggest indirect tax reform since Independence, seeks to replace a slew of central and state levies with a uniform GST rate to convert the country into a customs union.

“In the Lok Sabha, the Congress walked out, every other party voted in favour. The Congress party has now made a statement that it has only one issue about the Constitutional cap which is a little difficult because our tariff is not decided through Constitution amendment,” he said.

The Congress, the original author of the tax reform, has called the Bill pending in Rajya Sabha as “flawed” and wants the government to cap the GST rate at 18 per cent.

The legislation has already been approved by the Lok Sabha but is pending in Upper House, where the ruling NDA does not have a majority. After it is approved by the Rajya Sabha, the legislation needs to be approved by half of the 29 states so as to roll out GST possibly by October 1.

Explaining the rationale, the finance minister said, it is extremely difficult to accept because every time you need to increase tariff in a given emergency, you have to amend the Constitution.

The tariff needs to be decided by the GST Council and not by a Constitutional cap, he explained.

“I think that’s the only glitch that remains. I would still want the Congress party to come on board. I can easily see and this is going to happen at this stage of biennial election. The numbers are significantly changing and in any case, I am reasonably confident that the numbers in the Upper House now also are in favour of GST,” he said.

Asserting that it is “extremely difficult to achieve double-digit growth in the current global environment, Jaitley said there is scope for improvement from the current rate if reforms are carried on.

“I don’t claim that it is possible in this global environment to come any where close to double-digit growth.  It’s extremely difficult, it’s practically impossible to do that,” he said.