Some BJP-ruled states expressed doubts over the implementation of goods and services tax (GST) from April as they are strongly opposed to the provision in the draft constitutional amendment bill that gives the Centre a veto power on the states’ taxation issues.
“It is impossible to implement GST from April 1 next year,” Madhya Pradesh Finance Minister Raghavji told reporters after state GST panel met here to discuss constitutional amendment bill to roll out the new indirect taxes regime, which will subsume the current indirect levies like excise, VAT, sales tax, and local taxes among others.
He also said the states are opposed to the provision in the draft constitutional amendment bill that grants a veto power to Union Finance Minister over the state GST.
“Everybody is opposed to the veto power of the Union Finance Minister. We need more time. States’ autonomy and federalism will be destroyed (if we accept this bill). This is against the fiscal autonomy of the states. Majority of the states - BJP ruled states and others like UP, Tamil Nadu, Orissa and some others are also against it,” the MP finance minister said.
His remarks came on a day when Finance Minister Pranab Mukherjee sought the cooperation of the states to table the constitutional amendment bill in the ongoing Monsoon session.
Gujarat finance minister Saurabh Patel also expressed similar opinion saying, “in the present form it will not come (constitutional amendment bill) in the Monsoon session. The Centre should allow the states to be empowered. If they don’t allow, GST is dead.”
Mr. Patel further said GST may affect the common man badly, that too in an environment of high inflation. “A 10 per cent CGST rate and a higher rate of SGST will force the common man to pay tax at more than 20 per cent against the present 5 per cent (VAT) on essential items like food, medicines, agricultural produce, footwear, readymade clothes, etc., and 12.5 per cent on other goods,” he pointed out.
Last month, the Centre had proposed three tier GST rate structure - combined 20 and 12 per cent for goods and 16 per cent for services with the Union and state government each imposing equal percentage of levy.
Ernst & Young tax partner Harishanker Subramaniam said if the constitutional amendment bill is not passed in the Monsoon session, it will be a challenge to implement GST from April next.