A key meeting of the GST Council to approve three draft laws — Model Goods & Service Tax; Integrated Goods and Service Tax (IGST) and Goods & Service Tax (Compensation to the States for Loss of Revenue) — has been put off to December 2-3 from November 25 scheduled earlier.
Though the finance ministry said the postponement is because another meeting of the law sub-committee comprising officials of the states and the Centre has been now scheduled for November 25, analysts felt that the deeper political divide following the banknotes crisis was also a reason for slowing of the process.
Sources said some states want changes in the integrated-GST and compensation Bills. The draft Bills are likely to be put in public domain shortly. Meanwhile, finance minister Arun Jaitley proposes to introduce these as Money Bills to ensure they are not stuck in the Rajya Sabha where the ruling NDA does not have a majority.
“The states have suggested certain changes relating to return procedures in the model GST law. Also, they have asked for changes in wordings in compensation law. We will finalise the three draft laws at the November 25 meeting,” a source added.
A meeting of the Union finance minister with the state FMs here on Sunday on bifurcating administrative powers of the Centre and states in the GST regime had failed to break the deadlock over the issue. States had alleged that the Centre, which wanted a vertical split of the 10-million indirect tax assessee base, had turned more adamant.
States like West Bengal, Kerala, Uttarakhand, Uttar Pradesh and Tamil Nadu insist on exclusive control over small taxpayers who earn less than R1.5 crore in annual revenue for both goods and services. They feel states have the infrastructure deployment at the grassroots level and small taxpayers are familiar with local authorities. The central government, on the other hand, is not in favour of the demand as it wants a single-registration regime for ease to service taxpayers. Instead of horizontally splitting the taxpayers — those with R1.5-crore revenue with states and those above with Centre — it proposes to divide the entire taxpayer base vertically wherein the taxpayers are divided between the Centre and the states in a fixed proportion.
As a compromise, the Centre is willing to give states an administrative power over two/third of the taxpayer base if service tax continues to be administered by the Centre.
State tax officers’ strike disrupts work
Work was affected in some commercial tax offices across the country on Wednesday due to a day-long pen-down strike by tax officers of various state governments. The strike call was given by the All India Confederation of Commercial Taxes Association (AICCTA), which claims to represent over 36,000 gazetted officers and about 2 lakh Class-III and IV employees in support of their demand of having a fair share in the administration of taxes under the GST regime.