The Empowered Committee of State Finance Ministers on Goods and Services Tax (GST) wants the mechanism for compensation to the States that will lose out on revenue due to the introduction of GST to be finalised and made part of the Constitutional Bill itself.

In addition to this provision in the Constitution, the States have recommended that an independent mechanism be created for the purpose.

The committee, headed by Jammu and Kashmir Finance Minister A.R. Rather, has rejected the Centre’s proposal to include alcohol and petroleum in the GST. It has rejected the UPA government’s proposal on powers to the Centre to notify ‘declared goods.’

“A provision on declared goods would have empowered the Centre to lower GST rates on any item without consulting States,” Mr. Rather said.

The committee has also recommended that the special status enjoyed by J&K under Article 370 be maintained even in the case of GST, so the proposed Constitutional amendment should not be applied to it.

“In the case of J&K, Article 368 prescribes how Constitutional amendments are to be made and for GST that is what will have to be followed,” Mr. Rather said. “It could be taken up after the GST Amendment is cleared.”

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