Empowered committee of state finance ministers on Goods and Services Tax Bill (GST), which met in Kolkata on Tuesday, arrived at a consensus that there would be no constitutional cap on the final GST rate as exigencies may arise in future to revise the rates.
Briefing media after the meeting, Finance Ministry Arun Jaitley said the committee was flexible on the issue of 1 per cent additional tax for first 3 years.
A two-day meeting in Kolkata is being held to arrive at a consensus on passage of the GST Bill during the Monsoon Session of Parliament.
It is undesrtood that Trinamool Congress has given its support to the Bill, thereby easing the way for GST passage.
Though all the states agreed on the idea of GST, Tamil Nadu has made some suggestions. “Virtually all the states have supported the idea of GST today barring Tamil Nadu which has expressed some reservations. TN has offered a few a suggestions which have been noted by the committee,” Jaitley said.
The government had earlier targeted to roll out the nationwide single tax regime from April 1, 2016 but GST has been stuck in the Rajya Sabha due to opposition by the Congress party.
The meeting was attended by Finance Ministers of 22 states including West Bengal’s Amit Mitra as well as Chief Ministers of Arunachal Pradesh and Meghalaya, deputy CM of Delhi and senior officials of seven others.
“The first thing which will have to be done is to pass the Constitutional amendment which has to be then ratified by the states. Then Parliament will have to pass the CGST Bill and states the SGST Bills” he said.
Jaitley said the states’ fear of loss of revenue for the first five years had also been addressed. “The Centre will compensate the loss and there should not be any cause for worry,” he said.
On the contentious issue of the Constitutional cap on the GST rate, the finance minister said: “There is a complete consensus on that, there should not be any such ceiling as exigencies may arise in future. Now it is left to the GST council.”
Regarding the future roadmap, Jaitley said: “We will try our best to bring the Constitutional amendment in the monsoon session of Parliament. Then the CGST and SGST legislations will be put in place.”
On calculation of the revenue neutral rate (RNR), he said Mitra will again convene a meeting of the Empowered Committee in July and the Chief Economic Advisor would give a presentation.
About dual control on tax rates by the Centre and states, he said it was again up to the committee to see that it was harmonious and there was no conflict. “It will be again discussed in the next meeting.”
The next meeting is likely to be held in the second week of July, Mitra said.