 "Arun Jaitley")
Even as the unified tax regime under the Goods and Services Tax (GST) moved a step closer to becoming a reality with all states extending support, reservations from Tamil Nadu remained a stumbling block.
While every state is in support of GST, Tamil Nadu has expressed reservation in its present form, said Arun Jaitley, Union Finance minister, while briefing the media after a meeting of empowered committee of state finance ministers in Kolkata on Tuesday.
“Virtually every state has supported the idea of GST. One state, Tamil Nadu, has said they have reservations, but they have suggested how it is implementable," said Jaitley.
Also, there is complete consensus among states that there will be no constitutional cap on rates of taxation, said Jaitley. A cap on rate is one of the main demands of the Congress.
Two issues that were widely discussed in the meeting were the calculation of the revenue neutral rate and the management of taxation structure in the perspective of the dual control of the Centre and state.
Amit Mitra, chairman of the committee, would meet the finance ministers of states in July to discuss the two issues.
Chief economic advisor Arvind Subramanian will also make a presentation on the revenue neutral rate calculation in July.
"A large part of the discussion centred around dual control and its management and the revenue neutral rate," said Jaitley.
Mitra elaborated, there was an agreement, for up to Rs 1.5 crore, the state would administer the GST mechanism, a consensus was to be reached on the dual management of the GST above Rs 1.5 crore.
For five years, if there is any loss of revenue to the state, it would be the liability of the Centre to compensate for the revenue loss, said Jaitley.
Also, the Centre is flexible on the issue of additional one percent tax for two years as a compensation to the producing states, added Jaitley.
Today's meeting was attended by 22 state finance ministers, along with several state and central officials.
The government would try to pass the GST Bill in the monsoon session of the Parliament and by the end of the year, CGST and SGST legislations would have to be passed.
Subsequently, the IGST legislation has to be passed by the Centre, said Jaitley. The draft was circulated among finance ministers of states today. The draft will also be out for public comments.
