With the Centre all set to introduce a constitutional amendment Bill on the Goods and Service Tax in the coming Budget session, the worries in Uttarakhand are growing over several issues related to the GST.
The main issue which still has not been addressed is the relation to the new tax regime which will take shape in the post–GST scenario where the government feels it may lose its leverage in terms of financial autonomy. The state government will lose value-added tax (VAT), a major source of its income, despite having seen a healthy growth during the past few years.
The target for the VAT this financial year is around Rs 2,700 crore which the government expects is likely to be achieved. Powered by an increase in VAT and other taxes, Uttarakhand mopped up Rs 4,065.03 crore in tax collections registering a robust growth of 30.8 per cent during April-November this year.
The new figures available with the finance department revealed, the impressive growth in taxes was largely due to increase of 0.5 to 1 per cent in VAT from April 1 this year. The total collections of VAT has now reached Rs 1,812.72 crore against Rs 1,382.38 crore last year ended November with a growth of 31.1 per cent.
Besides VAT, there is still confusion over the state taxes on essential commodities. In the hill state, the VAT on petrol and diesel is around 25 and 20 per cent, respectively, which is a major source of income for the government. “We are still not clear what will happen to this tax structure in the post-GST scenario,” said a top government official when asked to comment whether prices of petrol and diesel will fall in case GST comes into effect.
Chief Minister Ramesh Pokhriyal Nishank too had made his apprehensions evident regarding GST in his several letters to the Centre. Nishank said the state should have the right to impose taxes on all units which emit pollution since Uttarakhand is preserving forests and the Himalayas for posterity. In addition to this, he stated the state should also be empowered to create its own resources for funding big events like Mahakumbh melas.
Nishank also sought to clarify his doubts whether GST may not eventually weaken the federal structure of the country.