New Delhi: The panel of the state Finance Ministers on GST on Friday said many issues, including a mechanism for CST compensation for the current fiscal, will have to be ironed out before rolling out the new indirect tax regime.
Agreeing with Prime Minister Manmohan Singh, Chairman of Empowered Committee of State Finance Ministers and Bihar Deputy CM Sushil Modi said the Goods and Service Tax (GST) implementation will have to wait till 2014.
"The Prime Minister has said GST rollout will happen after next general elections. So they will have to compensate even for 2013-14... That issue is alive... So many issues need to be ironed out before GST is rolled out," he said while addressing the industry chambers here.
Last month, Prime Minister Manmohan Singh had assured that the long-awaited GST regime will be in place in an "appropriate type" by 2014.
Modi said: "I would not like to contradict the PM... The problems facing GST are not NDA Vs UPA. The empowered committee will continue to work to ensure GST is rolled out in 2014-15".
The GST Bill, which was introduced in Parliament in 2010, is currently being vetted by the Standing Committee on Finance. After the committee submits its report, the states and the Centre would together finalise the draft and bring it back to Parliament.
"Parliamentary standing committee will submit its recommendations on GST in one month. Another committee is going to be constituted for drafting of GST Bill after Standing Committee submits it recommendations," Modi said.
He further said that the Centre would have to agree to compensate the states for five years after implementation of the GST, as the states would then incur losses on account of subsuming of most indirect taxes.
"States are saying whenever GST rollout happens, then at least for five years, the central government should compensate to states whatever losses are there for 5 years. And that compensation should be through an independent mechanism," he said.
The GST rollout has missed several deadlines on account of differences over contentious issue of Central Sales Tax compensation and design of the GST structure between the states and the Centre.