On a crucial day in which the GST Council was to decide the future course of action over Goods and Services Tax implementation, it has emerged that the various parties could not come to a consensus. Sources say that the GST Council will meet again on November 4-5 again.
Just a day earlier, Finance Minister Arun Jaitley said the 14% secular rate of growth was agreed on after discussing five different formulas to compute the states’ possible VAT revenue growth in a non-GST scenario (any shortfall from this level is eligible to be compensated).
It was decided on Tuesday, in order to compute the states’ revenues losses from the goods and services tax (GST), a 14% annual growth over the 2015-16 VAT revenue base would be assumed over the initial five years when the Centre will be obliged to fully compensate them for these losses. The broad contours of the compensation formula finalised here by the GST Council added to the revenue base of the 11 geographically disadvantaged states. Also, the CST revenue in the base year with the actual rate of 2% would be added to the revenue base, and not 4% as initially demanded by the states.