The Empowered Committee of State Finance Ministers on GST, headed by Bihar Deputy Chief Minister Sushil Kumar Modi, will meet in New Delhi on October 14 to discuss issues related to the roll out of the ambitious indirect tax regime.

“We will be discussing the GST and the Central Sales Tax (CST) compensation to States besides many other issues pertaining to Value Added Tax (VAT),” Mr. Modi, who is also Bihar’s Finance Minister, told PTI.

While a Constitutional Amendment Bill for roll out of GST has been introduced in Parliament and referred to a Standing Committee, there are several issues which are yet to be resolved between the Centre and States.

These issues include provision for States to levy cess in case of natural calamities; their autonomy in matters of taxation; concerns on powers of the proposed dispute settlement authority; and concerns of State governments on loss of revenue on account of reduction in CST rates.

“The CST was reduced to 2 per cent from 4 per cent about three years back. Now the Centre has to compensate States. For two years, 2010-11 and 2011-12, many States have not received compensation,” Mr. Modi said.

CST, a tax on inter-State movement of goods, was reduced from 4 per cent to 3 per cent in 2007-08, and further to 2 per cent in 2008-09 after the introduction of Value Added Tax (VAT).

The Centre has already asked all the States to file their compensation claims for the last fiscal on account of reduction in CST. It plans to do away with CST in phases to facilitate implementation of the new indirect tax regime.

An amount of Rs 2,411 crore has been released to 10 States for loss of CST revenue in financial year 2010-11.

The Empowered Committee, Mr. Modi said, will also take up unresolved taxation issues between the States and the Centre with regard to VAT.

“We will discuss the taxes on textiles, tobacco and sugar and issues pertaining to additional excise duty. We will discuss about the possibility of imposing VAT on textiles and sugar and what are the tax rates being imposed on tobacco, he added.

The Committee will also discuss the views of the State governments on the online payment of taxes.

“We want all banks to facilitate the deposit of online payment of Central Excise, Income Tax and VAT. After the meeting, we will talk to the Reserve Bank on this issue”, he added.

The committee, Mr. Modi said, will also come out with a report on the experiences of the GST team which recently visited Europe. It will contain information about the implementation of GST in EU and other related issues, he added.

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