Haryana has asked the Centre to make it mandatory for the Centre to compensate states for losses in the GST regime while noting that the provision in the Bill has been worded in a manner that the Centre may not be obliged to do so.
Haryana Finance Minister Capt Abhimanyu said that there was a proposal in Clause 19 of the 122nd Constitutional Amendment Bill, 2014 introduced in Parliament for compensation to states for loss of revenue on account of introduction of Goods and Services Tax (GST).
"This provision has been worded in a manner that the Centre may not be obliged to pay the compensation because the word 'may' used in this clause is not obligatory and binding on the Central Government to compensate the losses in the GST regime," Abhimanyu said as per a statement released by the Haryana government.
He said the word 'may' needs to be substituted with the word 'shall' to make it mandatory for the central government to compensate states for the losses in the GST regime.
Abhimanyu was speaking in the meeting of the Empowered Committee of State Finance Ministers, which was chaired by Union Finance Minister Arun Jaitley here today.
He also suggested the Union Finance Ministry that a new entry may be included in the List II-State List in the 7th Schedule to the Constitution of India which would provide taxation powers to these states, the statement said.
This formulation would enable the food grain producing states to levy tax on food grains and to sustain their contribution to national food grains pool, provide adequate support to farmers and also protect their revenues on a permanent basis without distorting the GST structure, it added.
Abhimanyu said that Haryana has been continuously voicing its concern over the differential treatment of tobacco and its products for imposition of tax by the Centre and the states in the GST regime.
