Empowered Committee to take forward discussion on GST tomorrow
October, 14th 2011
The states, particularly those led by BJP government, are likely to raise pitch again tomorrow on certain contentious issues like dispute settlement mechanism in the proposed Goods and Services Tax (GST) regime.
State finance ministers, attending the meeting of the Empowered Committee on GST, are also expected to ask the Centre to make up for their revenue loss on account of reduction in the Central Sales Tax (CST).
These issues may come up in the meeting to be presided over by committee Chairman Sushil Kumar Modi, who is also the Deputy Chief Minister and Finance Minister of NDA-ruled Bihar.
Even though the Constitution Amendment Bill on the proposed GST has been introduced in the Lok Sabha, several states would convey their issues and concerns over the provisions of the Bill before the Parliamentary Standing Committee on Finance which is going into the bill.
During tomorrow's meeting, the Empowered Committee is expected to fix a date for presenting its views before the Parliamentary Standing Committee headed by BJP leader Yashwant Sinha.
One of the main contentious issues relates to how the Centre-State disputes would be settled. While the bill provides a dispute settlement authority, several states want all the decisions by consensus as is done in the 27-nation European Union bloc.
Tomorrow's meeting will resume discussion on building a consensus on the indirect taxation reform bill.
According to sources, states will present their views on the GST Constitution Amendment Bill.
The committee will also come out with a report on the experiences of the GST team which recently visited Europe. It will contain information about the implementation of GST in EU and other related issues.
The Constitution Amendment Bill for roll-out of GST has been introduced in Parliament during the last Budget session and it has been referred to the Standing Committee on Finance.
However, there are several issues which are yet to be resolved between the Centre and the states.
These include provision for states to levy cess in case of natural calamities, their autonomy in matters of taxation, concerns on powers of the proposed dispute settlement authority, and concerns of state governments on loss of revenue on account of reduction in the CST rates.
The CST, a tax on inter-state movement of goods, was reduced from 4 percent to 3 percent in 2007-08, and further to 2 percent in 2008-09, after the introduction of Value Added Tax (VAT).