Government to introduce GST this year after consultation with states
July, 23rd 2014
Government will try to resolve issues hampering the roll out of the goods and services tax (GST) within this year, Finance Minister Arun Jaitley informed the Lok Sabha on Friday.
"The government targets to find a solution in the course of this year and approve the legislative scheme which enables the introduction of GST (Goods and Services Tax)," he said during Question Hour.
Jaitley said government is "willing to take a pragmatic view", but did not want a "token GST, but a substantial GST." The Economic Survey had suggested the government could start with a central GST. "There should be consensus" finance minister said adding that GST will be introduced after consulting the states.
"Government has also assured states that it will compensate for any revenue loss incurred by them, from the date of introduction of GST, for a period of three years," he said.
"Time has come for pragmatic approach...one or two exceptions the government can consider" Jaitley said adding that GST would spur growth.
"GST is likely to bring about a fundamental change in the tax structure by redistributing the burden of taxation equitably between goods and services," Jaitley said.
However, finance minister cautioned that GST should include most indirect taxes.
"If too many taxes are excluded, the objectives of GST will not succeed...It (GST) is a good cause that everybody fall in line," he noted.
GST was to be originally rolled out from April 1, 2010 but has been delayed because of concerns of states.
"States' concerns with regard to the GST mainly relate to loss of revenue, fiscal autonomy, compensation, keeping certain items out of GST, subsuming of certain taxes in GST etc," Jaitley said.
He cited the case of Punjab and Gujarat. While the former was worried about purchase tax, the latter has expressed concerns over loss of manufacturing revenues.
"Certain states may face problems in initial stages of implementation of goods and services tax...Those will be discussed," he said. services tax...Those will be discussed," he said.