Some of the state Finance Ministers are not on board with the governments proposal on the goods and service tax (GST), report Media.
The government has proposed a single rate state and centre GST between 12-20% in the first year, while the peak effective rate will be at 15%.
There is a divide between NDA ruled states and UPA ruled states. Madhya Pradesh (MP), Uttarakhand and Karnataka have not agreed to the proposal sating that they want higher tax rate.
Finance Minister Pranab Mukherjee is meeting the state FMs on this today. The Constitutional Amendment on GST has been presented to the states.
MP is vehemently opposed to creating council Of Finance Ministers on GST reasoning that it may inflict serious blow to state autonomy. MP implored that GST should be revenue positive and be flexible to allow states to decide rates.
It also said that the proposed tax collection method is complex due to supply chain and hence it is unrealistic to estimate that GST will reduce tax evasion.
MP wanted that primary commodities should remain outside GST while primary commodities must remain within states domain.
MP further suggested that taxation of farm income, land, forest produce and mining should be outside GST. MP argued that Article 286 amendment and restrictions on states to levy sales tax needs to be removed.