Two panels to facilitate rollout of Goods and Services Tax

Centre agrees to full compensation for first three years.

Union Finance Minister Arun Jaitley has approved the formation of two committees to facilitate the implementation of the Goods and Services Tax (GST) from next April.

A steering committee, chaired by the Additional Secretary, Department of Revenue, and the Member Secretary of the Empowered Committee of State Finance Ministers, will monitor the setting up of IT infrastructure for the GST network, the Central Board of Excise and Customs and other tax authorities. The committee will monitor the progress of consultations with stakeholders such as trade and industry and the training of officers.

The other committee, chaired by Arvind Subramanian, Chief Economic Adviser, will recommend possible tax rates under the GST that would be consistent with the present level of revenue collected by the Centre and the States. While making recommendations, the committee will take into account the expected levels of economic growth, the different levels of compliance, and the broadening of the tax base. The panel would assess the sector- and State-wise impact of the GST on the economy.

States’ demand

Earlier this month, the States demanded that the Centre compensate them fully for any revenue loss due to the implementation of the GST for five years. At the time, the Centre said such additional demands would make its rollout difficult. The Centre had agreed to full compensation for three years, 75 per cent compensation in the fourth year and 50 per cent in the fifth year.

The other issues that could potentially delay the rollout have to do with the tax on tobacco and tobacco products and the entry tax. K.M. Mani, head of the Empowered Committee of State Finance Ministers, had said the States should be allowed to levy an additional sales tax on tobacco and tobacco products. Some States have favoured abolition of the entry tax, while others have demanded that purchase tax not be merged with the GST.