Union Finance Minister Arun Jaitley, in a bid to reach a consensus with the Congress on the Goods and Services Tax (GST) Bill, has said he is willing to consider scrapping the 1% manufacturing tax, a key demand of the Congress to support the NDA government on the landmark legislation.
The tax has been sought by states such as Gujarat and Tamil Nadu, who have created a huge manufacturing base over the years.
"I have told my friends in Parliament I am ready to go back to those manufacturing states and tell them we have guaranteed you to make good for all the loss suffered in the first five years. So this 1% additional levy issue is resolvable," he said in New Delhi on Wednesday.
But he was categorical in saying that the demand to include the GST rate in the Constitution Bill was not acceptable to the government. The Congress has been demanding that the 18% tax rate be made part of the Constitution Bill if the government wants its support to pass the legislation in the Rajya Sabha, where the ruling NDA does not have a majority.
"Are tariffs part of Constitution? Can tariffs ever be cast in stone? Suppose there is a drought or a flood in 10 states and for one week you need to raise tariffs, are you then going to amend the Constitution?" PTI quoted him as saying.
Jaitley said the tax rate would be the prerogative of the GST Council.
"After all, states and the Centre are surrendering their rights to the GST Council. The GST Council will decide the rate," he said.
The GST Bill, billed as the most significant indirect tax reform in India, aims at the "economic integration" of India, according to Jaitley.
The Bill has been a victim of bitter politics between the BJP-led NDA and the Congress, with the main Opposition party stalling parliamentary proceedings over the past few days, accusing the BJP of harassing the Congress leadership of Sonia and Rahul Gandhi over the National Herald case.