Union Finance Minister Arun Jaitley on Wednesday said that GST Council has not decided tax rates yet. He also said that rate structure will be finalised in the next meeting. On Day 2 of the GST Council meet, Jaitley said, “We have converged towards consensus on compensation to losing states and discussed different tax structure for GST”. The Finance Minister, however, said that discussion was “inconclusive”. Talking about draft legislation, the FM said, “it can be discussed only after all the issues are settled.” He also underlined that the council has discussed source of funds to compensate states losing GST revenue.
Yesterday, In order to compute the states’ revenues losses from the goods and services tax (GST), a 14 per cent 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 adds to the revenue base of the 11 geographically disadvantaged states what they forewent to run tax relief schemes, but not in case of other states. Also, the CST revenue in the base year with the actual rate of 2% will be added to the revenue base, and not 4% as initially demanded by the states.