Cabinet agrees to compensate states for revenue loss for five years on introduction of the uniform nationwide indirect tax regime, approved passage of a new consumer protection bill; decides to set up Rs 20k cr National Investment & Infrastructure Fund
New Delhi : The Cabinet approved amendments to the GST bill to compensate states for revenue loss for five years on introduction of the uniform nationwide indirect tax regime, as has been suggested by Rajya Sabha Select Committee.
The Union Cabinet, chaired by Prime Minister Narendra Modi, agreed to the recommendation made by the Select Committee on compensation to states to win over support of regional parties like TMC of West Bengal and Odisha’s BJD in getting the landmark Constitution Amendment approved by the Upper House where the ruling NDA does not have a majority.
The Cabinet decided that the modalities for levy of 1 per cent tax over and above the GST rate by states as well as the ‘band’ rate would be finalised while framing the rules, sources said.
The Rajya Sabha Select panel, headed by BJP’s Bhupender Yadav, in its report last week suggested GST rate to be no more than 20 per cent and levy of 1 per cent additional tax by states only on actual sales and not on inter-company stock or inventory transfer.
The Constitution Amendment Bill for a Goods and Service Tax (GST), to replace all indirect taxes like excise and sales tax on all products, except alcohol, has already been passed by the Lok Sabha and is pending passage in the Upper House.
The government plans to roll out GST from April 1, 2016, a very tight schedule considering the fact that the Bill has to be approved by Rajya Sabha and half of the 30 states. The Rajya Sabha panel had recommended an explanation to be included in the provision that would make it clear that the 1 per cent levy would be on goods sold and not on inter-company inventory transfers.
To increase the resources of states, the Committee suggested that the “band” rate should be defined in the GST laws.
The final GST rates would be decided by the GST Council, chaired by Finance Minister, with Centre having one-third votes and states together having two-third votes.
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NIIF to boost investments in sagging infra sector
The Union Cabinet approved creation of a Rs 20,000-crore National Investment and Infrastructure Fund (NIIF), a sort of sovereign fund, for development of infrastructure projects, including the stalled ones.
The decision to set up the fund was taken at the meeting of the Cabinet headed by Prime Minister Narendra Modi, sources told PTI. The NIIF, sources said, is being established with an aim to maximise “economic impact” mainly through infrastructure development in commercially viable projects, both green field and brown field, “including stalled projects”.
The fund could also consider funding nationally important projects in the manufacturing sector.
The government would contribute 49 per cent of the subscribed capital of NIIF. “The contribution of the government to the NIIF would enable it to be seen virtually as a sovereign fund and is expected to attract overseas sovereign/quasi sovereign/ multi-lateral/bilateral investors to co-invest in it,” sources said.
Sources said that domestic pension and provident funds and national small saving fund may also provide funds to NIIF.
The Cabinet also approved a new Consumer Protection Bill 2015 that seeks to replace a 29-year-old law and proposes to set up a regulatory authority which will have powers to recall products and initiate class class suit against defaulting companies, including e-tailers. The move assumes importance as there is growing concern over safety of consumer products and services especially after the Maggi controversy.
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