Weekly Current Affairs

GST: Two major hurdles cleared [Economy]

  • Paving the way for a possibly smoother passage of the GST Constitutional Amendment Bill in Rajya Sabha, Union Cabinet approved two key changes to Bill that effectively address concerns of state governments and most of Opposition.
  • The Cabinet removed from the Bill, contentious provision for a one per cent additional tax levy by manufacturing States and introduced a guarantee of 100 per cent compensation to States for fi ve years to make good any revenue loss incurred by them due to the introduction of the Goods and Services Tax.
  • However, there was as yet no consensus on whether the GST rate should be included in the Bill, one of the major demands of the Congress, and one of the main reasons why the Bill is still stuck in the Upper House of Parliament.
  • The Centre had earlier planned to compensate the States for any revenue loss due to the GST that will replace the present indirect tax regime, in a phased manner — 100 per cent compensation in the fi rst three years, 75 per cent in the fourth year, and 50 per cent in the fi fth year.