The Select Committee constituted to examine the Constitution (122nd Amendment) Bill, 2014 submitted its report to Rajya Sabha on July 22, 2015. The summary of the report of Select Committee is as under:
| Clauses of 122nd Constitutional Amendment | Changes Recommended |
| Clause 12 (Articles 279A) | The proposed Article provides that the GST Council will make recommendations on the GST rates, including the bands of GST that may be levied.
The Committee recommended that the term “bands” must be defined to include the range of GST rates, over the floor rate, within which CGST and SGST may be levied on specific goods or services or classes of goods or services. The GST Council is also tasked with making recommendations on taxes that would be subsumed by the central and state GST laws. In this regard, the Committee recommended that in the drafting of state GST laws, revenue sources of Panchayats, Municipalities etc. must be protected. State governments must also take measures to ensure adequate revenue flow to local bodies. The Bill states that the GST Council would decide upon the modalities to resolve disputes. The Committee stated that the creation of a separate dispute settlement authority would hamper the functioning of the GST Council in general and the legislatures in particular. |
| Clause 18 (Additional Tax) | The Bill empowers the centre to levy an additional tax, up to 1%, on the supply of goods in inter-state trade. This tax will be given to the state from where the supply of the good originates. The Committee stated that the provision of 1% additional tax is likely to lead to cascading of taxes.
Hence, it recommended that the term „supply‟ be explained to mean “all forms of supply made for a consideration”. |
| Clause 19 (Compensation to states) | The Bill permits Parliament to make a law to provide compensation to states for any loss of revenue from the implementation of GST for a period of upto five years.
The Committee recommended that compensation would be provided to states for a period of five years.
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Other recommendations
The Committee made certain other recommendations in relation to the implementation of GST.
(i) The Committee recommended that the GST rate for the banking industry should be minimum, to ensure international competitiveness. If possible, banking services could be outside the purview of GST.
(ii) The GSTN is the comprehensive back end infrastructure network for the management of tax data and reporting of the GST. The Committee noted that the non government shareholding in GSTN is dominated by private banks, and this is not desirable. It recommended that the non government institution shareholding be limited to public sector banks and financial institutions.
(iii) It also stated that the information technology preparedness of states must be improved. Further, the IT infrastructure, unified tax credit clearing mechanism may be put in place.
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