India's sales tax should be below 20 percent - Congress party

By Manoj Kumar

NEW DELHI (Reuters) - India's proposed sales tax should be set at less than 20 percent, the opposition Congress party said on Thursday, signalling a willingness to compromise as long as the government takes into account its concerns.

The comments by senior Congress leader Anand Sharma came as parliament opened its winter session, with a proposed goods and services tax (GST) topping the priorities of Prime Minister Narendra Modi's government.

"The government should come up with structured proposals on GST," Sharma, chief tax negotiator for Congress and its deputy leader in the upper house, told Reuters.

Congress first proposed the tax when it was in government, but political hostilities since Modi's general election triumph 18 months ago have stalled the measure. It would is intended to create a single market and boost commerce in India's $2 trillion economy.

Now, after a defeat for Modi's Bharatiya Janata Party in Bihar state elections earlier this month and criticism of Congress for paralysing parliament, the two sides appear to be inching toward a compromise.

Congress lawmaker Shashi Tharoor said he was hopeful a consensus will now be reached with the government.

Asked whether he thought the bill would be passed in the current session, Tharoor said: "It will be rash to predict anything in the political environment ... but having said that, on balance I would think so."

The bill has passed the lower house of parliament but has been blocked in the upper house, where Modi's coalition lacks a majority.

Congress would like to cap the rate of GST at less than 20 percent, scrap a proposed state levy and create an independent mechanism to resolve disputes on revenue sharing between states.

The government is trying to win over small regional parties to build the two-thirds majority required to pass a key constitutional enabling amendment. It needs to bring Congress round to be sure it can pass.

Finance Minister Arun Jaitley said in a television interview on Wednesday night that the three demands by Congress had not been included in its original GST bill.

"GST was not our idea - it was a Congress idea, but it's a good idea," Jaitley told the NDTV news channel. "I hope the Congress sticks to the good it proposed rather than flaw it."

(Additional reporting by Paritosh Bansal and Aditya Kalra; Editing by Larry King)