GST Council, finance panel should work in tandem

‘Coordination mechanism a necessity’

N.K. Singh.

Chairman of the Fifteenth Finance Commission N.K. Singh has called for symmetry in the working of the GST Council and the Finance Commission.

“The finance commissions recommend distribution of revenues between Union and States, and thereafter among the States, further to the third tier,” Mr. Singh said, delivering a lecture at the Reserve Bank of India on Friday. He said while the Finance Commission looked at projections of expenditure and revenue, the issue of GST rates exemptions, changes, and implementation of the indirect taxes were within the domain of the GST Council.

“This leads to unsettled questions on the ways to monitor, scrutinise and optimise revenue outcomes. The coordination mechanism between the two is now an inescapable necessity.”

He said for the first five years of GST, a 14% guaranteed compensation was provided to the States, and would end in 2022. “But many States are seeking an extension of this mechanism thereafter. The future roadmap on this has a bearing on the recommendations which the Commission is expected to make on the likely revenues of States, sustainable growth rates, and the Revenue Deficit of Grants under Article 275,” he added.