Be flexible before GST roll-out: Sushil Modi to centre

The central government will have to adopt a flexible approach to ensure the roll-out of the Goods and Services Tax (GST) regime by 1 April 2012, Sushil Mody, the chairman of the Empowered Committee of State Finance Ministers, said in Delhi.

Lack of political consensus between the centre and the states has resulted in a delay in the introduction of the landmark legislation, which promises to bring about greater transparency in the taxation regime in the country.

"I am optimistic that if the way things are going, and if everybody cooperates, then we can catch the timeline also," said Modi, a Bharatiya Janata Party (BJP) leader and deputy chief minister of Bihar.

The committee of state finance ministers met in Delhi on Friday and decided to seek compensation for the loss on account of phasing out of Central Sales Tax (CST) for fiscals 2010-11 and 2011-12. It would meet again in October to discuss the constitution amendment bill relating to GST, introduced in the budget session of the Lok Sabha. The bill has been referred to the parliament's standing committee, which is being headed by former BJP finance minister Yashwant Sinha.

The state finance ministers will discuss the bill and also meet members of the parliamentary standing committee to present their point of view.

BJP-ruled states including Himachal Pradesh, Madhya Pradesh, Chhattisgarh and Gujarat have expressed concerns that the new GST regime would eat into their autonomy in respect of levying taxes. But Modi said the deadlock had nothing to do with politics. "Even Tamil Nadu, which is not ruled by the BJP, is opposing strongly," he notes. The BSP-ruled Uttar Pradesh has also raised objections about the new regime.