The State government has been insisting that the goods exempted from Value Added Tax (VAT) be extended the same benefit under the new Goods and Services Tax (GST) regime when it comes into force from July 1.
There are certain goods like textiles, sugar that have been exempted from VAT. “We met various organisations in New Delhi, which demanded exemption of certain goods from GST. Our argument is that the exemptions given in VAT be continued in the GST regime also,” said Finance Minister Yanamala Ramakrishnudu.
The GST Council, headed by Union Finance Minister Arun Jaitley, would meet in Srinagar on May 18 and 19 to finalise the tax rate structure and also the commodities.
The Finance Minister conducted a meeting with senior officials of the Commercial Taxes and Finance Departments on the State’s preparedness for GST, at the Secretariat near here on Tuesday.
Mr. Ramakrishnudu said that the issue would be raised at the GST Council meeting. So far the tax rates and also the commodities for different tax structures have not been finalised.
Five rates
It was broadly decided to have five rates – 0%, 5%, 12%, 18% and 28% – with luxury goods attracting the highest tax. The Centre is proposing to levy cess on tobacco products, high-end cars, soft drinks and coal (clean environment cess). These products would attract both tax and cess, he said.
The GST Council decided to collect the cess, though AP has suggested paying the compensation to the States from the Consolidated Fund of India. But ultimately, the GST Council decided to go for a Cess Fund. The cess thus collected from all the States would be given to the States that incur loss due to the GST regime, he said.
Loss of ₹2,000 cr.
The base year for calculating the revenue of a State would be 2015-16 and growth of 14% would be taken for calculating the likely revenue of each State in the first five years. The States that have achieved 14 % growth rate would not be eligible for the compensation. AP, on average, has already achieved 14% growth rate. AP may or may not get the compensation, he said, adding, “we may lose a revenue of ₹2,000 crore when GST is implemented.”
