This ad will auto close in 10 seconds

Parl panel report on GST before Monsoon Session: Modi

Last Updated: Saturday, June 2, 2012 - 16:41

Mumbai: The Parliamentary panel on Goods and Services tax (GST) is expected to submit final report before the Monsoon Session, Chairman of the Empowered Committee of State Finance Ministers Sushil kumar Modi said on Saturday.

"We are inching towards GST rollout, but not very fast. One of the major obstacles has been crossed as the Parliamentary Standing Committee on Finance will start deliberations from June 8 on the GST Constitutional Amendment Bill," Modi told a seminar on GST here.

"Committee Chairman Yashwant Sinha has assured me to complete deliberations and prepare the report before the Monsoon session," he added.

However, Modi refused to set a deadline for GST rollout, saying, "I can't give you a deadline on GST implementation as the states have many apprehensions about the actual import of the new common tax regime.

"The Centre needs to address the concerns of the states to ensure its rollout. Moreover, the ongoing political uncertainties at the Centre may also create some hurdles."

However, Modi pointed out that the GST network or the technology platform for the new common tax regime, which will make the country a single market enabling easier and cheaper movement of goods and services, will be in place by August.

Calling for more interaction between the Centre and the states to resolve the differences, Modi said the Centre is yet to assure the states on fiscal autonomy, powers to fix tax rates and impose levies, compensating the states for their revenue loss and establishing a dispute settlement authority.

Listing out the issues of the states, he further said, "The major concern is with regard to fiscal autonomy. Some states are of the view that the constitutional amendment will take away their fiscal autonomy."

Modi also expressed displeasure over the Centre not meeting its commitment to compensate the states for their losses arising from halving the Central sales tax or CST.

"So far the Centre has given only Rs 6,000 crore in compensation to the states against an actual loss of Rs 19,000 crore last fiscal," Modi said.

In the run-up to the GST rollout, the centre had planned to phase out CST and slashed the rate of CST from 4 to 2 percent with a promise that the states would be compensated for the loss arising out of reduction in CST rate.

But with the Centre's own finances being under pressure, it has not done so.

Modi said the states have suggested standard and lower rates and that there be a floor rate with a narrow band of 2 to 3 percent like the European Union.

He said the states have serious concerns over the proposed Article 279 B on GST dispute settlement authority as they are more comfortable with the proposed GST Council headed by the Finance Minister and one representative of the Centre and the rest from the states vested with powers to resolve disputes.

"Any dispensation involving multiple partners does require a mechanism to resolve disputes and a provision can be made empowering the GST Council to decide about the mechanism to resolve disputes arising from its recommendations," he said.

On the apprehensions of revenue loss arising out of GST, Modi recalled that similar concerns were voiced at the time of introduction of value added tax (VAT). However, VAT vastly increased revenues of the states, going up from 12-13 percent pre-VAT to 24-30 percent.

At present, not more than 15 percent of the total service sector is being taxed and even if a substantial part of the currently untaxed service sector were to fall in the negative list, that still leaves considerable potential for tax collection from the service sector, he said.


First Published: Saturday, June 2, 2012 - 16:41
comments powered by Disqus