States Reject Centre's Goods & Services Tax Bill

By siliconindia | Friday, 12 December 2014, 09:35 Hrs

NEW DELHI: The States have rejected the draft Bill for the Goods and Services Tax (GST), dealing a major blow to the Centre’s resolve to roll it out at the earliest.

The Centre-States stalemate has put a question mark over whether the government will be able to introduce the GST Constitution Amendment Bill during the ongoing Winter Session of Parliament. Union Finance Minister Arun Jaitley said in the Lok Sabha last month that he would introduce this Bill during the session. The GST rollout has missed several deadlines in the absence of a Centre-States consensus.

At a meeting of the Empowered Committee of State Finance Ministers on Thursday, the States opposed the draft Bill and its proposal to extend the GST to petroleum goods and entry tax.

“Consensus eludes the Centre and the States on the three main issues of compensation, petrol tax and entry tax,” Empowered Committee Chairman Abdul Rahim Rather told presspersons. He said the Empowered Committee would not support the Centre’s Bill unless it conceded the States’ three demands.

The GST will subsume all excise and service taxes. The States want compensation from the Centre for the revenues they will lose over five years from the shift to the GST regime. They want a clause on the compensation to be inserted into the Bill, Mr. Rather said.

The Centre’s proposed draft does not have such a provision at present.

“We were surprised to know that the Centre has only agreed to one of our recommendations,” said Mr. Rather.

The Union government agreed that its share of the revenue from the GST would go to the pool of tax revenues devolved to the States.

Mr. Rather, however, welcomed Mr. Jaitley’s announcement in the Lok Sabha on Wednesday on the payment of 11,000 crore by April as compensation to the States for the central sales tax. “We are happy to know that the Centre has agreed to keep a provision of 11,000 crore in the current year’s budget for it.”