Consultative panel for resolving the issue of loss to States

Even as a number of hurdles are yet to be crossed, Finance Minister P. Chidambaram, on Friday, expressed the hope that the Constitutional Amendment Bill for rolling out the Goods and Services Tax (GST) regime would be passed before the end of the current financial year to usher in “a more effective and efficient substitute” for a plethora of indirect taxes.

Addressing the third meeting of the consultative committee attached to his Ministry, Mr. Chidambaram pointed out that though there were still some issues relating to GST and its network (GSTN) to be resolved, yet they were not insurmountable. The Finance Minister told committee members that the objective of implementing the GST regime in lieu of most indirect taxes was to put in place an effective and efficient tax system, which was friendly and fair to the taxpayers. “Once GST is implemented, it will not be adversarial to the taxpayers,” he said.

According to an official statement here, members of the consultative committee participating in the discussion offered various suggestions relating to GST and its network. While they viewed the GST regime as good for all stakeholders, including the Centre and the States as well as traders and business communities, a number of issues were raised pertaining to GSTN, including security of data, settlement of disputes, and integration of direct tax information system into the GST system.

Divergent views

Some members highlighted the need to resolve the issue of loss accruing to the State governments on account of reduction in the rate of CST (Central sales tax) and the divergent viewpoint between the Centre and the States over the compensation issue. “...firstly, the issue of loss to the States [must] be settled to the satisfaction of all States before we march forward. This is causing delay on the part of the States in accepting GST and this uncertainty may be settled once for all,” they said. Some of the other members suggested that the decision-making process of the GST Council should be made more practicable by providing decisions with two-third majority of the States, rather than on consensus basis.

Similarly, issues relating to dispute settlement mechanism and exclusion of certain products from the GST system, among others, were also raised during the discussions.

While these specific issues relating to delay in implementation of the GST regime came up for discussion, the Constitution Amendment Bill is under scrutiny by the Standing Committee on Finance headed by BJP leader Yashwant Sinha. The panel is expected to submit its report in the current session of Parliament.

Keywords: GST Bill

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