After talks, some headway on GST Bill

Tribune News Service

New Delhi, July 26

Making some headway on the GST Bill, Union Finance Minister Arun Jaitley and the empowered group of state Finance Ministers today agreed on the principle that the tax rate would be lower than the current levels. The broad consensus was that the rate should not be part of the statute.

The Finance Ministers sought a statutory framework for compensation to the states for any loss of revenue during the first five years of the Goods and Service Tax (GST) subsuming all indirect levies, including VAT.

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The states sought that the word “may” be changed to “shall”, to make sure the states were fully compensated.The Finance Minister said since the terminology needed to be vetted legally, it would be examined if it was legally possible.

There was a broad agreement on the issue of keeping small businesses and traders with a turnover of Rs 1.5 crore or less under the ambit of a single state government and not dual control as this would cause problems to small traders.

After the meeting, West Bengal Finance Minister and panel chairman Amit Mitra said the meeting arrived at the principle that the ordinary businessman and the common tax man would benefit from GST by way of lower tax rates while the states would not face any loss of revenue. Also, there was "consensus to keep the GST rate out of the Constitutional Amendment Bill," he claimed.

Many states do not favour a cap on the GST rate under the Bill. They argue that this will hurt their autonomy as they will have to approach Parliament to change the rates.

The meeting decided to set up a committee to work out a compensation mechanism. It will submit a report in 10 days.The states also sought sharing of IGST revenue for inter-state transactions. Mitra said, "The broad consensus put together is satisfactory to all political parties and all states,"adding that a "foolproof" wording for compensation to states had been worked out.

There are indications that the government may now bring the GST Bill in the Rajya Sabha next week instead of this week as planned earlier.