Discussions on the goods and services tax (GST) have almost lost direction with the state finance ministers’ panel revisiting the structure of the new regime that also includes the tax rates.
At its meeting on Monday, attended by only seven FMs ? mostly Congress ruled ? the committee dwelt upon GST structure and central sales tax compensation while there was no discussion on the fundamental pre-requisite for the new regime, constitutional amendment that is required.
As a part of the structure, states have proposed a lower threshold limit for special category states like North-Eastern States, Jammu and Kashmir, Himachal and Uttarakhand. They have proposed a threshold limit of Rs 5 lakh for levying GST in these states instead of the Rs 10 lakh proposed earlier.
The meeting was attended by finance ministers of West Bengal, UP, Delhi, Haryana, Tamil Nadu, Meghalaya and Jammu and Kashmir. Other states were represented through their officials and secretaries.
States have already communicated their suggestions to finance minister Pranab Mukherjee, who is yet to give his reaction, chairman of the empowered committee Asim Dasgupta said. Dasgupta added GST rate structure would be discussed in subsequent meetings with the GST panel. On the inter-state GST, the process is going on but certain things have to be clinched, he added.
On the issue of compensation on account of reduction in the central sales tax, he said the loss on this count was Rs 20,000 crore in the current financial year. States have requested the Centre for 60% CST compensation. They will request for an early release of compensation from Centre.
The introduction of GST has been delayed amid lack of consensus between the states and the Centre on various issues regarding GST structure. At present, there is a deadlock over Constitutional amendment that needs to be done for introducing GST.
States fear loss of fiscal autonomy if the amendment takes place in its current form.