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Business News/ Politics / Policy/  States raise fresh concerns on GST
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States raise fresh concerns on GST

The issue of adequate compensation for revenue losses, which, if not resolved could delay the rollout of the indirect tax reform

Finance minister Arun Jaitley introduced the 122nd constitution amendment bill in the recently concluded winter session of Parliament and will push for its passage in the budget session. Photo: HTPremium
Finance minister Arun Jaitley introduced the 122nd constitution amendment bill in the recently concluded winter session of Parliament and will push for its passage in the budget session. Photo: HT

New Delhi: Some states have raised fresh concerns on the final design of the goods and services tax (GST) as envisaged in the constitution amendment bill, as well as on the issue of adequate compensation for revenue losses, which, if not resolved could delay the rollout of the indirect tax reform.

Finance minister Arun Jaitley introduced the 122nd constitution amendment bill in the recently concluded winter session of Parliament and will push for its passage in the budget session.

The Narendra Modi-led government aims to implement this tax reform by April 2016.

The introduction of GST, which will create a unified market, will usher in greater transparency and accountability, besides making it easier to do business. Some states are concerned about its impact on their revenues.

Although Jaitley, after a pre-budget meeting with states, said that most states are in favour of implementing GST quickly, states like Tamil Nadu, Odisha, Kerala and Gujarat have raised concerns on certain provisions in the bill, suggesting that consensus among the centre and the states may still be far away.

Tamil Nadu chief minister O. Panneerselvam asked the central government not to rush through the bill as it has long-term implications on the fiscal autonomy and revenue position of states. He urged the centre to let the empowered committee of state finance ministers to evolve a consensus. “We strongly urge the government of India against hustling through the constitution amendment bill hastily, as such a move would be bound to have serious long-term implications on the fiscal autonomy and revenue position of the states," the chief minister, who belongs to the All India Anna Dravida Munnetra Kazhagam, said.

In the meeting, Biju Janata Dal-ruled Odisha said that the constitutional amendment bill does not address the concerns of mineral-bearing states.

The state had asked that mineral producing states be given powers to levy an additional non-rebatable cess subject to a ceiling, said Odisha finance minister Pradip Kumar Amat.

Odisha has also asked for powers to tax tobacco products over and above the GST that will be levied. It has also sought powers to administer integrated GST, that will be levied on inter-state movement of goods.

Bharatiya Janata Party-ruled Gujarat has sought the extension of the additional 1% tax for an indefinite period. The constitution amendment bill has given powers to the producing state to levy an additional 1% tax on inter-state supply of goods, but only for the initial two years.

In addition, most states sought provisions in the upcoming budget to compensate states for losses arising from the gradual phasing out of the central sales tax. Jaitley had promised states 11,000 crore in the current fiscal year as part-compensation for losses—total CST losses are estimated at around 34,000 crore.

PTI contributed to this story.

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Published: 26 Dec 2014, 07:40 PM IST
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