Jaitley may reach out to Congress for GST passage

Jaitley is likely to court senior leadership of the Congress, whose opposition to certain clauses in the GST Bill has remained stumbling block in passage of the biggest indirect tax reform law, before the monsoon session of Parliament begins on July 18, a top government source said.

The government is banking on support from smaller regional parties to pass the national sales tax legislation in the Upper House of Parliament and then get supporting laws enacted by year-end so that Goods and Services Tax (GST) is introduced from April 2017.

GST Bill, which intends to convert 29 states into a single market through a new indirect tax regime, was earlier planned to be introduced from April 1 this year, but the deadline was missed as the bill to roll it out remains stalled in the opposition-dominated Rajya Sabha.

Congress, which first proposed the constitutional amendment in 2006, is demanding capping the overall rate at 18 per cent and scrapping an additional 1 per cent tax designed to compensate manufacturing-heavy states that fear losing revenue once the measure is implemented.

After Parliament approves the constitutional amendment to allow GST, it needs to be ratified by more than half of states. Then Parliament must pass another bill to implement the GST.

After the Constitution Amendment Bill is passed in Parliament, there are three more legislations - Central GST (CGST), State GST (SGST) and Integrated GST (iGST) - which are required to be passed.

The GST bill -- which will help create a single national sales tax to replace several state and central levies -- has already been approved by the Lok Sabha or Lower House of Parliament and is pending in the Upper House where the government doesn't have a majority.