The revised draft of the Constitution Amendment Bill on GST will drop the contentious issue of giving veto powers to the Union Finance Minister in order to bring states on board.
However, the Union Finance Minister will remain the chairman of the council, which will take decisions on the indirect tax system.
With states rejecting the earlier draft on the ground that giving veto powers to the Union Finance Minister would interfere with their fiscal autonomy on indirect taxes, the new draft of the Bill proposes that all states, along with the Centre, would have to agree on a decision in the GST council to make it effective.
Also, states will be given deputy chairmanship of the council on a rotational basis, a key official source told PTI.
"If there is no consensus arrived on any decision taken by the council, then it would be blocked, even if one member rejects a proposal," the source said.
This way, the council would become a recommendatory body, rather than mandatory, as proposed in the original draft.
However, Madhya Pradesh Finance Minister Raghavji wants more clarity on the issue.
"There has been no mechanism suggested on what would be done if there is no consensus," he added.
Finance Minister Pranab Mukherjee would meet the state GST panel on August 18 to discuss the revised draft of the Constitution Amendment Bill.
Before meeting Mukherjee, state finance ministers will meet among themselves on the same day to discuss the revised Constitution Amendment draft to implement GST.
Earlier, efforts to introduce GST from the next fiscal received a setback after states opposed the original draft Bill to amend the Constitution in its present form, saying it provides a veto power to the Union Finance Minister in matters relating to state subjects.
"This proposed draft Constitution Amendment Bill related to GST in its present form is not acceptable to the states," Asim Dasgupta, the Chairman of the Empowered Committee of State Finance Ministers on GST, had said after a meeting of the panel.
He had said states are against infringement on their financial autonomy and have certain reservations on the draft Bill's provisions for the GST Council and the GST Disputes Authority.
The draft had proposed a GST council that would have members from the states and the Centre, with veto power given to the Union Finance Minister.
For any dispute, there would also be a dispute authority, according to the proposed draft.
States fear that giving a veto power to the Union Finance Minister on state taxation issues would curb their fiscal autonomy.
Dasgupta added that states also feel the GST Disputes Authority should not find a place in the Constitution Amendment bill and may be incorporated in GST legislations.
Later, Mukherjee said he doesn't intend to be a "Super Finance Minister".
"I have no intention of becoming the super Finance Minister to interfere with the state GST," he had said in Parliament during debates in the Rajya Sabha and Lok Sabha.
"They (states) will have their rights and I shall have my rights... They have a responsibility to their states. That basic structure cannot be altered," he had said, replying to a debate in the Rajya Sabha on the price situation.
After that meeting, the Finance Ministry started redrafting the Constitution Amendment Bill to allay states' fears over the veto power given to the Union Finance Minister.
GST, the new indirect tax regime, will subsume excise duty and service tax at the central level and value-added tax at the state level, besides cess, surcharges and local taxes.
Last month, Finance Minister Pranab Mukherjee proposed a three-tier structure for GST -- 20 per cent for goods, 12 per cent for essential goods and 16 per cent for services.
The differences between the Centre and states over the GST structure has already delayed its introduction by a year. Against the original schedule for implementation this financial year, it is now proposed to be introduced in 2011- 12.