Lok Sabha Passes Amendment Bill On GST Cess

New Delhi: The Lok Sabha on Wednesday approved a bill to raise the maximum cess levied on luxury cars from 15% to 25%, a move aimed at enhancing central funds to compensate states for revenue loss due to the implementation of the goods and services tax (GST).

Amid din, the Lower House passed the GST (Compensation to States) Amendment Bill, 2017, that seeks to replace the ordinance issued in September following the GST Council’s recommendation at its 5 August meeting to increase the maximum rate at which compensation cess could be collected on certain automobiles.

The ordinance had provided for a hike in upper limit of cess on mid-size, hybrid variants and luxury cars to 25%.

In his brief reply to a short discussion on the bill, finance minister Arun Jaitley said the funds collected following the hike in cess on luxury vehicles will be used to compensate states for any revenue loss on account of GST.

The House took up for discussion the GST (Compensation to States) Amendment Bill, 2017 amid din as the Congress and Trinamool Congress members raised slogans and banners protesting against union minister Anant Kumar Hegde’s “amend the Constitution” remarks.

Responding to the contention of opposition members who took part in the debate, Union Finance Minister Arun Jaitley said that change in the GST rates was a “natural” process and linked to the rise in tax collection.

The government had issued an ordinance in September to increase cess on motor vehicles, including large cars and sports utility vehicles, from 15 per cent to 25 per cent.

He said the GST Council, which comprises state finance ministers, meets every month and takes decision on rationalisation of taxes in the backdrop of revenue collection.

Participating in the discussion, members demanded that the GST rate should be reduced on a variety of items including sanitary napkins, agriculture equipments, handicrafts, handloom items and sports goods. Some members even suggested that there should be single tax slab instead of four.

The debate over the GST compensation bill continued amid slogan-shouting by Congress and TMC members who demanded resignation of Mr. Hegde for his controversial comments.

At a function in Karnataka on Sunday, Mr. Hegde had reportedly said people should identify themselves by their religions and “those who, without knowing about their parental blood, call themselves secular, they don’t have their own identity…They don’t know about their parentage.”

He had also said “we are here to change the Constitution and we’ll change it”.

As the Opposition forced four adjournments during the day, Parliamentary Affairs Minister Anant Kumar asserted that Mr. Hegde’s remarks were being distorted.

Dissatisfied by Mr. Kumar’s intervention, the Opposition continued to storm the Well shouting slogans.

Meanwhile during the discussion, Bhartruhari Mahtab (BJD) said that the impact of GST roll out on exchequer will be known after January once the implementation of the new indirect tax regime is streamlined.

In last three months the centre has provided over ₹1,000 crore as compensation to Odisha and ₹2,000 crore to West Bengal.

T.G. Venkatesh Babu (AIADMK), Kaushalendra Kumar (JDU), Prem Singh Chandumajhra (SAD) demanded special packages for their states of Tamil Nadu, Bihar and Punjab.

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