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Haryana government asks centre to compensate on CST and roll put GST
July, 05th 2012

Haryana has impressed upon the Central Government to either restore compensation on account of the Central Sales Tax (CST) or roll back the rate of CST from two per cent to at least four per cent, and roll out GST early.

This is necessary to check the decline in the revenue collections suffered by the state last year. Speaking at the meeting of the Empowered Committee of Finance Ministers of states in New Delhi today, Haryana Excise and Taxation Minister, Mrs Kiran Chaudhary said that the growth rate of VAT inHaryana last year was 19.2 per cent, lower than the previous fiscal. The state registered a significant revenue drop in CST collections due to the unilateral decision of the Central Government to discontinue CST compensation.

In the current year, CST collections would further decline if the Central Government does not decide to either restore CST compensation or roll back the rate of CST from two per cent to at least four per cent, Mrs Chaudhary asserted.

She pointed out that Haryana had suffered a revenue loss of more than Rs 3,000 crore in 2011-12 alone on account of reduction in CST rate, and VAT collections getting lowered. A loss of more than Rs 3,000 crore for a state having a total tax collection of about Rs 20,000 crore, is substantial and had resulted in revenue deficit budget, she said.

On the issue of rolling out of GST, Mrs Chaudhary said GST was a big tax reform and in a federal economy, it would take some time before a consensus could be built. But implementation of the Direct Tax Code which belongs to one department of the Union Government is getting delayed because of various operational difficulties.

Introduction of GST involved more than one department of the Central Government, and all state governments of the country. When I say so, neither I want to disparage the efforts of the Income Tax Department nor do I want to sound pessimistic about the introduction of GST, but I just want everybody to appreciate the difficulties involved in the process, Mrs Chaudhary said.

Haryana, on its part, has always unequivocally supported the introduction of GST and today finds itself in a situation where the delay in its implementation is resulting in a huge revenue loss to the state. The Central Government should review its stand on the issue.

Mrs Chaudhary said that the Empowered Committee had, at its last meeting, resolved that taxation of services on the basis of a negative list was a better idea as compared to a big fat list of positive services which were to be taxed. The Central Government has already moved ahead in this direction after introduction of the Finance Bill, 2012-13 in Parliament.

I had suggested at the last meeting that a window of dialogue between Government of India and a sub group of the Empowered Committee may be started at the earliest so that the contentious issues arising out of the definition of services and goods can be resolved. On this note, I would request all the Empowered Committee members to resolve for creation of such a committee comprising officers from CBEC and sub group of officers from the Empowered Committee, she said.

Referring to the issue of terms and conditions for extension of the contracts of the service provider and consultant for TINXSYS, she said that Haryana had agreed for finalization of the terms and conditions as decided at last meeting.

She hoped that concerns of states over strategic control of the GSTN-SPV and GST network in which the Central Government would hold 49 per cent equity, would be addressed and steps taken in the direction of setting it up.

 
 
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