Initially, when the Bill was passed in this House on 6th May 2015, we strongly pitched and pressed for those amendments, but the government did not agree. When it was transmitted to the other House and passed there on 3rd August 2016, again our party made a strong plea and pressed for accepting those amendments which were moved by us, but the government did not relent even then.
Sir, right from the beginning we are opposing this Bill because Tamil Nadu, as a manufacturing and origin state, would lose substantial amount of revenue, whereas the destination states are bound to benefit at our cost and there is no full compensation for the loss that would accrue to us. The hon chief minister of Tamil Nadu had written several letters to the Union finance minister and the hon prime minister pointing out the lacunae in the Bill and making a request to incorporate the justified amendments. But very sadly, they were not taken into consideration.
I would like to, very briefly, mention the apprehensions and the reservations that were pointed out by the hon chief minister of Tamil Nadu. First and foremost, we said that the GST Council should not be a Constitutional body, and opposed the voting weightage given to the government of India in this Council because it compromises on the financial autonomy of the states in a federal set-up.
Secondly, we were insisting that the petroleum and petroleum products be kept permanently outside the purview of the GST. Here, the government says that the date from which this will be levied would be decided by the GST Council. So, we are opposing this.
Thirdly, considering the health concerns of citizens, the hon chief minister of Tamil Nadu has been reiterating that the states should be given the power to levy additional tax on tobacco and tobacco products. But this has not been accepted by the government. Fourthly, we further suggested that since the manufacturing states would suffer a huge loss, the compensation that is envisaged in the Bill should be full and for a period not less than five years. For example, the state of Tamil Nadu would lose an amount of more than Rs 9,000 crore annually because of this, and there is a need to compensate the loss fully. Moreover, the compensation that is to be paid should be over and above the present level of devolution and grants to the states. Further, the level of assistance being provided for the centrally-sponsored schemes should be maintained at the same level without any cuts.
Fifthly, though the government has dropped the proposed one per cent inter-state tax over and above the GST, we insisted that the states be permitted to retain four per cent of the central GST part of the inter-state GST, on all inter-state supply and transfer of goods and services. We again reiterate our stand that four per cent of this tax be allowed to be retained by the states.
Sixthly, several hon members also made a mention in this House and also in the other House that the Centre is passing this Constitutional Amendment Bill without mentioning the rate of tax. This is a very peculiar state of affairs. There is a need to specify this before passing this Bill.
Apart from this, I would like to refer to some administrative issues for consideration of the hon Union finance minister. In the meeting of the Empowered Committee of the States' Finance Ministers, it was proposed that all assessees below the threshold limit of Rs 1.5 crore should be administrated exclusively by the states while those above this limit would be dealt with both by the Centre and the states. But there is no clear agreement on this.
We, from our party, insist that only the states should administer those with a turnover of less than Rs 1.5 crore. Secondly, it was also proposed that all dealers below a turnover of Rs 25 lakh should be exempt from registering under GST. This would effectively mean that around 60 per cent of the dealers, at present registered under the VAT system, would be out of the purview of GST. We reiterate our position that the threshold limit for levy of GST should be fixed at Rs 10 lakh. The hon finance ninister may clarify his stand on this.
Finally, Mr Deputy Speaker, Sir, even at this stage of considering the Rajya Sabha amendments in this House, I would request the government to bring in further amendments to protect the financial autonomy of the states. We would like to have a positive response from the hon finance minister to the points raised by me, while he replies to the debate. With these words, I conclude. Thank you.
Speech by P Venugopal, All India Anna Dravida Munnetra Kazham Lok Sabha member from Tiruvallur, on the Goods and Services Constitution Amendment Bill, 2016, passed by the Lok Sabha as amended by the Rajya Sabha, in New Delhi on August 8