The Centre and states on Tuesday reached a “broad consensus” on the Constitution amendment bill on the Goods and Service Tax (GST), which could pave the way for its introduction in Parliament.
The Centre and states on Tuesday reached a “broad consensus” on the Constitution amendment bill on the Goods and Service Tax (GST), which could pave the way for its introduction in Parliament.
The Centre and the states on Tuesday agreed on the principle that the tax rate would be lower than existing levels and on the wording of the Constitution amendment on compensation to states for five years for any loss resulting due to the rollout of the GST. The GST rate will not be spelt out in the Constitution after the amendment.
However, in a new controversy, the states told the Centre that only states should have control over businesses with annual turnovers of less than Rs 1.5 crore and that dual Centre-state control should apply only to businesses with turnovers over that amount.
West Bengal finance minister and empowered committee of state finance ministers chairman Amit Mitra said there was unanimous agreement that the issue of control of small businesses was “non-negotiable” and that this was clearly conveyed to Union finance minister Arun Jaitley. “We have done our duty and put together a broad consensus on GST. It is now for the government to work on political atmospherics,” said Dr Mitra on whether the amendment bill would be introduced in the current session of Parliament. He said the Centre and the states agreed that the GST tax rate would also have to protect the revenue of states.
Dr Mitra said it was decided during a meeting of the empowered committee convened by Mr Jaitley that the Constitution amendment bill would include the mechanism to compensate the states for any revenue losses due to subsuming of all indirect tax levies, including VAT, in the first five years of the GST being introduced. “As you know that no tax rates are provided in the Constitution. It was discussed and the conclusion reached was that the Union finance minister will communicate to other parties, he will explain it to them that it can’t come in the Constitution amendment but it can come in the GST Bill or GST Act,” Dr Mitra said. The “broad consensus put together is satisfactory to all political parties and all states,” he said, adding that “foolproof” wording for compensation to states has been worked out. Dr Mitra said while there was no talk on a specific tax rate, it emerged at the meeting that the rate should be lower than existing levels otherwise “there is no point of reform”.
