Higher revenue neutral rate can lead to leakages: Mitra on GST

A higher revenue neutral rate under the proposed GST law will lead to leakages, compliance issues, West Bengal Finance Minister Amit Mitra said today.
"What is interesting to us is we have to watch it carefully. If the revenue neutral rate is too high there will be leakages, there will be lower compliance ... GST's whole effort is to make it transparent and simple the tax," he said.
Mitra, who is also the Excise, Commerce and Industries Minister of West Bengal, was interacting with media on the occasion of West Bengal Day being celebrated at the trade fair here.
On asked about the status of Trinamool Congress party on the proposed Goods and Services Tax (GST), Mitra said: "TMC's position is that we in principle agree, in practice we have many issues for which we have written to the Finance Minister, one at a time."

"So like this, there are many issues, on any question on GST, in-principle we agree. And some of them have been met some of them will have to be met. For example revenue neutral rate, we don't know what the revenue neutral rate or tax will be after GST. For 26 or 27 per cent rate of GST, there will be lot of leakages. So that's another in practice question, in principle we support," he added.
He said the West Bengal government is among the few participants in the country who has supported the proposed GST with clarity.

"I have been on the empowered committee of the Finance Ministers (on GST). Almost all states supported West Bengal's position, because we agree in-principle but in practice we have to be in the act of federalism. Mamata Banerjee has repeatedly said there has to be consistency in federalism," Mitra said.

He said TMC will continue to raise the issue of revenue neutrality so that there are no leakage issues.
On asked about Congress party's approach on GST, he said, "Now the revenue neutrality issue we have raised, we will continue to raise so that there is no leakage. I have nothing to do with what Congress is saying."
Mitra said no revenue neutral rate has yet been agreed to or given to the empowered committee of finance ministers, adding that the call has to be taken by the panel.
He also said the National Institute of Public Finance & Policy has given a revenue neutral rate and probably submitted to the government.

Mitra said West Bengal's position on GST is very clear
and it wants an effective and practical GST regime.
"We need a consensus of states, and that is what we have got so far. I do not want to consider what the Congress or non -Congress or NDA whatever (saying). I can talk only about Trinamool, I can only talk about Bengal.
"Our position is very clear. We will want a GST, since we have supported the manifesto, that is effective, that is practical, that will increase the GDP of the country and most importantly, small and medium enterprises must benefit from this process," he said.

Mitra said the state is one among having the highest problems in terms of multiple taxation and multiple compliances.
He said Bengal's focus is MSME, small and medium enterprises as 93 per cent of the employment in this country is under small and medium enterprises, which is an unorganised sector. While, organised sector is only at 7 per cent.
"Trinamool Congress has already agreed to .. From the floor of Parliament and in the empowered committee," he said.
On Gross Value Added (GVA), he said the state bureau is engaging with the Central Statistical Office (CSO) and has arrived at numbers that has been accepted by the latter.

Besides, Mitra said that a lot of new industries have happened at small medium and large level in the state.
"And we have seen in the Bengal Business Global Summit, Rs 2.43 lakh crore of proposals were received because of this Summit in January. Out of that, over Rs 91,000 crore have already come or under implementation of the government," he said.
He also said that there are over 5 lakh units have been established in Bengal under small and medium business.