Panel waiting for clarity from the Modi government on its stand on the issue

An early rollout of the Goods and Services Tax (GST) seems unlikely as the Empowered Committee of State Finance Ministers plans to start work on its design and form only after Parliament passes a Constitutional Amendment for introducing the new tax regime and the States ratify it.

“Though the reports of other sub-groups have come, or will come by the weekend, work on the main one — the Model GST Law for the States — will start only after the amendment,” A.R. Rather, Chairman of the committee, told The Hindu on Tuesday. “We are waiting for clarity from the Modi government on its stand on the amendment.”

At a pre-Budget meeting of State Finance Ministers on Monday, Union Finance Minister Arun Jaitley called for a quick consensus on the GST followed by an early rollout.

The empowered committee has, however, thrown the ball back into the government’s court. Mr. Rather has written to Mr. Jaitley asking for the government’s views on the issues pertaining to the Constitution Amendment Bill.

Elusive consensus

“Earlier, consensus was difficult to build because of opposition by some BJP-ruled States, especially Madhya Pradesh and Gujarat, but it was achieved later at a meeting held in Shillong last November,” Mr. Rather said.

Following the Shillong meeting, the empowered committee wrote to the Centre, rejecting the Finance Ministry’s Bill. As the Bill lapsed with the end of the term of the 15th Lok Sabha, Mr. Rather has sought the Centre’s views on it afresh.

The committee maintains that alcohol and petroleum, major sources of revenue for States, should be excluded from the GST. Further, the panel is unwilling to give to the Centre powers to notify “declared goods” and fix GST rates on them without consulting the States.

The States want a mechanism to compensate them for revenue losses due to the GST, to be made part of the Constitution Amendment Bill.

Keywords: GST rollout