Early roll-out of GST likely as centre-state differences narrow: Rather

03 July 2014

The stage looks set for an early roll-out of the goods and services tax (GST) with the chairman of the empowered committee and Jammu and Kashmir finance minister Abdul Rahim Rather stating on Thursday that there is a general consensus on the introduction of GST and that there are only minor issues to be addressed by the centre.

"I can't give you exact date but I think it will not take much time. Government of India is very much interested to have this tax reform introduced. Every state is on board," he said.

"Every state wants GST to be implemented. Only they want their concerns are addressed. That will be done, I think," Rather said after a four-hour meeting of state finance ministers.

GST, the long-pending tax reform that would replace most indirect taxes such as excise, service and local levies, has been an important agenda of the Modi government.

Detailing the areas of concern, Rather said, "there are certain areas of disagreement between the state and the centre, like petroleum products, In the Shillong meeting we had made a consensus that petroleum products should be kept outside GST, it needs to be subsume".

Besides, he said, GST compensation is another issues. The revenue loss to states due to implementation of GST should be compensated by the centre.

"Government of India has said it will give compensation for three years, but it has not agreed to make compensation to make it a part of the Constitution through amendment. But states are insisting that compensation should be a part of the Constitution amendment so that states get their compensation," he said.

Another issue is entry tax, which states are not ready to forego but government of India as not yet agreed to this.

Rather also said that states have also demanded that the centre's tax should go to the divisible tax pool and states should get their share, according to the recommendations of the Finance Commission.

Rather said the centre has to move a step forward to allay fears of states on revenue loss at least in some cases as the prime concern for them is protection of financial resources.

Speaking to reporters West Bengal finance minister Amit Mitra said, "The simple process is that here are two categories of issues discussed - unclear issues those need to be clarified and areas where we completely unanimously disagree."

For instance, he said, petroleum should not be subsumed in GST. Entry tax should not be subsumed in GST. These require insertion into the bill.

"The most important is confidence building in the state to rely on the Centre's words," he said.

Mitra said, "In the case of CST (central sales tax) it was most unexpected that after saying they will compensate the states, the states lowered CST from 4 percent to 2 percent. But when came the time for compensation that compensation was denied."

States are not getting CST compensation since 2010-11.

"West Bengal has lost Rs4,300 crore by not having this compensation...Some areas of clear differences where the states feel one way and the perhaps the centre another these need to be resolved for move forward," he said.

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