Union Minister of State for Commerce and Industry Nirmala Sitharaman on Saturday said that the States need not fear that injustice would be done to them under the new indirect tax regime as their grievances would be redressed by the GST Council, which was more powerful than Parliament as far as indirect taxation was concerned, in a democratic manner.
A decision had not yet been taken on taxing petroleum products and liquor as the States sought time to assess the likely impact of imposing GST on the two commodities.
All the States would be duly compensated as per norms for the loss incurred by them due to implementation of GST, for which an exclusive cess would be levied on a few sinful goods such as tobacco and ice creams.
“The GST Council had met 17 times up to June 30 and discussed a host of issues exhaustively. It will solve problems in implementation and certainly consider pleas to do a rethink on fitment of some commodities in the different slabs, depending on their merit,” she stated.
Addressing the media here, Ms. Sitharaman said the surrendering by the Central Government and the States of their respective rights to impose taxes was a classic example of cooperative federalism, and the GST Council was wary of the teething troubles, which would be eventually solved.
She said the GST rates were fixed on the basis of a national weighted average price index, and barring a slight variation, which could be partly due to some taxes the States could still collect, the system would be by and large uniform.
Ms. Sitharaman said the much-needed clarity that GST would lend to foreign investors on their tax implications would improve the ease of doing business, and it (GST) leaves no room for tax evasion as the entire system was online.
With the GST, the old complicated tax system of VAT vanished, she observed, drawing attention to the fact that what had so far been decided was with the consent of all the members of the GST Council (the Union Finance Minister and the Finance Ministers of 29 States and 7 Union Territories).
‘No hidden charges’
The Union Minster further said there was no scope for hidden charges under the GST as the consumers need to be given the break-up of the Central and the State components.“Consumers have always paid the taxes. For traders and service providers, the GST brings in a greater degree of accountability,” Ms. Sitharaman added.
