Union Finance Minister Arun Jaitley on Monday said that Goods and Services Tax (GST) will benefit most of the States from day one especially the consumer States.
"GST will benefit most of the states from day one especially the consumer states," Jaitley said while speaking here today at the meeting of the Parliamentary Consultative Committee.
He said that to remove any apprehension among the States about the fall in their revenue collections, provisions have been made in the Constitution Amendment Bill on GST introduced by him in the Lok Sabha on last Friday to ensure that none of them lose any revenue after the implementation of the GST.
In this regard he mentioned that it is proposed to levy a non-vatable additional tax of not more than 1 percent on supply of goods in the course of inter-State trade or commerce.
Jaitley said that this tax will be for a period not exceeding two years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate.
The Finance Minister further said that the States have been ensured that there will be no revenue loss and the centre will compensate States for any loss of revenue arising on account of implementation of the GST for a period up to five years.
He said that a provision in this regard has been made in the Constitution Amendment Bill and that the compensation will be on a tapering basis i.e., 100 percent for first three years, 75 percent in the fourth year and 50 percent in the fifth year.
Jaitley briefed the members about the series of meetings held by him with the Empowered Group of State Finance Ministers wherein concerns of the various States were addressed.
The Finance Minister said that as the volume of trade expands and the growth momentum picks-up, then every State will be benefitted with the rise in their revenue collections with the implementation of GST."
Replying to the various queries of the members, the Finance Minister said that the GST will help in reducing tax on tax and therefore, will be beneficial to the consumers.
"The GST will also be beneficial to the Centre, States and industrialists, manufacturers, common man and the country at large since it will being more transparency, better compliance, increase in GDP growth and the revenue collections of both States and the Centre," he said.
He said that the government is open for any suggestion for making further improvement(s) in the GST Constitutional Amendment Bill introduced by him in the current Session of Parliament.
Jaitley said that the GST is a continuing process which would further evolve and improve with time and added that the Government is in favour of strengthening the co-operative federalism in the country and will make all out efforts to evolve as much consensus as possible in implementing the GST.
