Finance minister Arun Jaitley will on Thursday consider steps to build consensus with state governments on issues that have so far delayed the final design of Goods and Service Tax (GST).
Revenue secretary Rajiv Takru is expected to make a presentation to Jaitley on the subject on Thursday. “Introduction of GST is high on the government's priority. You would hear a lot about GST in the coming days,” said a senior official in the government.
Issues relating to compensating states for their lost central sales tax revenue, subsuming of entry taxes, petroleum products and alcohol into GST and concerns of states with a strong manufacturing base like Gujarat would be discussed on Wednesday. States have certain reservations about the very nature of GST as a destination-based tax on consumption as it may not be in the interest of producing states.
In a presentation made on Wednesday by the revenue department, the minister was appraised of the problems and challenges being faced on the revenue front. While direct tax receipts had exceeded the revised targets in 2013-14, indirect taxes did not meet the target due to a contraction in manufacturing activity that depressed excise duty collection.
Jaitley, according to sources, expressed keenness to meet state finance ministers on GST. Issues concerning gold imports too came up for discussion during the presentation. Officials pointed out that the increase in import duty on gold has led to increased smuggling of the precious metal. Import duty on gold was raised to 10% last year, while the RBI put quantitative restrictions on the import.