Centre awaits states view on GST constitutional amendment

Centre awaits states view on GST constitutional amendment

New Delhi: The Centre said it is waiting for the unified view of states, whose finance ministers would meet on 6 December to arrive at a consensus, on constitutional amendment to implement Goods and Services Tax (GST).

“We are awaiting the states counter draft of the Constitutional Amendment Bill, which will have the consensus of all the states. When we have that we will take it forward," revenue secretary Sunil Mitra told reporters in New Delhi.

The empowered committee of the state finance ministers would be meeting on 6 December to discuss the GST model received from the central government to arrive at a consensus and may suggest their own alternative proposal.

“The agenda of the empowered committee includes their annual reports, their accounts, their expenditure. They will also discuss CST compensation issue," Mitra said.

CST, a tax on movement of goods from one state to another, was reduced from 4% to 3% in 2007-08 and further to 2% in 2008-09 after the introduction of VAT as it is considered distortionary.

He added that for the last three years the Centre has been compensating the states for CST.

The roll out of GST will subsume excise duty and service tax at the Centre’s level and VAT on the states front, besides local levies.

The new indirect tax regime has already missed a deadline of 1 April, 2010. The new deadline of 1 April, 2011 is also likely to be missed and the Centre has now said that it may be rolled out sometime in the next financial year.

The Centre’s proposal for a GST council to effect changes in GST, besides a Dispute Settlement Body as part of constitution amendment bill has not been agreed to by some states.

Constitution amendments are required to roll out GST since in the current scheme of things the Centre cannot impose tax beyond manufacturing and states will not be able to levy service tax.

A draft constitution bill proposed by the Centre to states has suggested a council chaired by union finance minister Pranab Mukherjee with states as members.

The states had raised objections on the proposal on the plea that it would give a veto power to union finance Minister over states taxation issues.

The Centre then provided another draft to states suggesting that changes in GST could be made only if there is consensus on those issues in the council.

However, some state finance ministers did not agree to even this suggestion and proposed an alternative model.

They suggested the current Empowered Committee of state finance ministers be enlarged and the union finance minister be made its Chairman.