No GST rollout by April as states vexed over CST share

An empowered group of state finance ministers indicated clearly after their meeting on Monday that the proposed goods and services tax (GST) could not possibly be implemented by 1 April, the 'deadline' set by the government.

Among other things, the key sticking point is that there is no clear proposal from the union government to compensate the states out of the central sales tax (CST), Bihar deputy chief minister and group chairman Sushil Modi said after the meeting in New Delhi.

"All the states are angry as still we have not received compensation, while Centre continues to deduct CST," Modi said.

The GST is supposed to be a major indirect tax reform that would do away with the plethora of such taxes being charged at multiple levels by states as well as the centre. However it has been troubled from the start by the intransigence of the states, particularly opposition-ruled ones who want to hang on to their taxation rights.

''We will meet union finance minister Pranab Mukherjee. I appeal to the FM that when a congenial atmosphere is being created for GST, this (CST compensation) should not become a bone of contention between the centre and states … Odisha, West Bengal, Haryana are incurring huge losses,'' Modi said.

The empowered group also expressed disagreement with the Centre's proposal to include natural gas and liquefied natural gas in the declared goods list. Barring Tamil Nadu, all states opposed inclusion of the two items in the declared list, and sought to cap the value added tax on these items to 5 per cent. The group said that it would be tantamount to encroachment on the states' autonomy, hence they want this subject to be left to their own taxation regime.