Barring the key producer State of Tamil Nadu, virtually all others have supported the Goods & Services Tax (GST), Union Finance Minister Arun Jaitley said on Tuesday.
“Virtually all the States have supported the idea of GST today barring Tamil Nadu, which has expressed some reservations… Tamil Nadu has offered a few suggestions, which have been noted by the committee,” he told reporters after a meeting in Kolkata of the empowered committee of State finance ministers on the proposed indirect tax.
Rejected by consensus Mr. Jaitley said the States had rejected the provision for a constitutional cap on the GST rate, one of the three demands of the Congress for supporting, in the Rajya Sabha, the constitutional amendment bill, meant to roll out the GST across the country.
“There has been complete consensus on no constitutional cap, as exigencies may arise in future to revise the rates.” This issue, he said, was left to the GST Council. Some States, including, Tamil Nadu, however, expressed reservations about the proposed council.
As a constitutional body, it would “impinge” on the legislative sovereignty of both Parliament and the State Legislatures and jeopardise the fiscal autonomy of States, they said.
‘Most States back GST’
Mr. Jaitley said there was no deadline for the implementation of GST. After the passage of the Bill in the Lok Sabha, the government had said that it was trying to roll out the nationwide single tax regime from April 1, 2016.
Explaining the road map for GST, he said that the first thing that will have to be done is to pass the constitutional amendment. It will have to be then ratified by the States. Then Parliament will have to pass the Central GST (CGST) Bill and the States, the State GST (SGST) Bills. He assured the States of full compensation in lieu of losses that might arise out of the transition to the new levy.
West Bengal Finance Minister Amit Mitra, who is the chairman of the empowered committee, will convene another meeting of the State finance ministers on the calculation of the revenue neutral rate (RNR) in July at which Chief Economic Adviser Arvind Subramanian will make a presentation. A panel headed by Dr. Subramanian has suggested an RNR of 17 per cent.
The meeting in Kolkata was attended by finance ministers of 22 States which, Mr. Jaitley, said, was a record attendance.
Separately, on Tuesday, Tamil Nadu Chief Minister Jayalalithaa expressed concern about the impact the proposed GST will have on the fiscal autonomy of States. Presenting a memorandum to Prime Minister Narendra Modi in Delhi, she said GST is likely to cause a huge and permanent revenue loss to the manufacturing and net exporting State.
>Full Draft of the model Goods and Services Tax law (pdf)
