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Govt setting up panels to look into CST compensation, framework news
08 November 2012

The government will set up two committees to look into the contentious issues of compensation to states and the design of the goods and services tax that continue to hamper the implementation of GST in the country, finance minister P Chidambaram said today.

Addressing reporters after a meeting of the empowered group of ministers (EGoM) in the capital, Chidambaram said one committee will deal with the central sales tax (CST) compensation issue while the other will deliberate on the design of the GST, adding that a resolution of the two issues are key to implementation of the GST.

"The committees will submit their reports by 31 December," Chidambaram said.

State governments are objecting to the current proposals for compensation of states for loss of revenue after the implementation of the GST, which necessitates a change in its design as well.

"The issue has to be addressed. Compensation is being paid for about two years and then partially for third year, but then compensation has not been paid subsequently. That issue has to be addressed. We can't duck that issue," he said.

"The other issue is the design of GST. All states support GST without exception. All of them said we support GST but we would like to discuss the design of GST," he said.

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Govt setting up panels to look into CST compensation, framework