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Govt to ensure no unilateral change is made in GST

Govt to ensure no unilateral change is made in GST
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First Published: Thu, Nov 12 2009. 11 02 PM IST

Creating framework: Chairman of the empowered group of state finance ministers on GST Asim Dasgupta says the draft of the constitutional amendment to introduce the new tax regime will be ready by 15 N
Creating framework: Chairman of the empowered group of state finance ministers on GST Asim Dasgupta says the draft of the constitutional amendment to introduce the new tax regime will be ready by 15 N
Updated: Thu, Nov 12 2009. 11 02 PM IST
New Delhi: The Union government is working on a constitutional mechanism that aims to ensure that any future modifications to the state as well as Central goods and services tax (GST) rates will happen only through a proper process of consultation in an appropriate forum.
Creating framework: Chairman of the empowered group of state finance ministers on GST Asim Dasgupta says the draft of the constitutional amendment to introduce the new tax regime will be ready by 15 Nov. Indranil Bhoumik / Mint
A council of state finance ministers could serve as the forum. In addition, while octroi is currently not part of GST ambit, the Centre will try and ensure that it is bought into the net eventually.
The GST regime is being put together by an empowered committee of state finance ministers headed by Asim Dasgupta, West Bengal’s minister of finance and excise. The Union finance ministry has representation on the committee, which released the first draft paper on GST for public consultation on Tuesday.
A key aim of the proposed mechanism will be to ensure that there are no unilateral deviations from the agreed GST rate, as has happened in some instances in the existing value added tax regime.
“Whenever we make legislation there is a need for someone to oversee it. That is the thinking. No final decision has been taken as yet. But, everyone wants a mechanism so that the rules of the game are laid down and not broken,” said Sumit Dutt Majumdar, member, Central Board Of Excise and Customs.
The draft discussion paper attests to this. “Special attention would be given to the formulation of a mechanism for upholding the need for a harmonious structure for GST along with the concern for the autonomy of states in a federal structure”, it says.
At another place, the draft says an “appropriate mechanism that will be binding on both the Centre and states would be worked out whereby the harmonious rate structure, along with the need for further modification could be upheld, if necessary with a collectively agreed constitutional amendment”.
A joint secretary in the finance ministry, who did want to be named, said that the contours of the forum are being worked out to ensure that any future modifications to GST framework would be carried out only through it.
The ministry is discussing the nature of powers that this body would have and whether it can exercise some sort of “over-riding authority” over state or Central legislative decisions with regard to GST.
Tax experts say such a mechanism would mean that taxpayers can look forward to some stability in future GST tax rates.
Though GST is almost certain to miss the original 1 April 2010 target date, the constitutional amendment for the introduction of GST is mentioned in the list of business for the winter session of Parliament.
The finance ministry official said the draft of the amendment is ready and is currently being vetted by the law ministry. On Tuesday, Dasgupta had announced that the draft will be ready by 15 November.
The official also said work on a uniform point of taxation was under way. This is a crucial aspect because the existing taxes that are to be subsumed under GST are levied at different points in the supply chain. He added that octroi, which is currently not part of the proposed framework, would eventually be included in the ambit of the tax “over a period of time”.
cnbctv18@livemint.com
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First Published: Thu, Nov 12 2009. 11 02 PM IST