FM-CMs meet harps on GST rollout

Written by fe Bureaus | New Delhi | Updated: Jun 29 2010, 07:08am hrs
Finance minister Pranab Mukherjee has intensified back-channel contact to states to bring them on a common ground on Goods and Services Tax (GST)the indirect tax proposal he wants to make a reality by April 2011.

After meeting the eastern states chief ministers in Patna in May, the FM met chief ministers of western and central states in Mumbai on Monday. While the finance ministry said the meetings worked on financial inclusion, sources in one of the state secretariat said GST was the big topic for debate between Mukherjee and the chief ministers. The Centre and the states have already resolved many issues like the base of the tax, which in turn will determine rates.There are apprehensions that many states still feel the roll-out of the new tax regime from April 2011 may not be possible.

Revenue loss with the proposed tax and the consequent compensation formula is the other major issue. The Centre has, however, promised to compensate states in full for any revenue loss that they may incur due the new tax. The states and the Centre are believed to have come on a common ground with regard to commodities like petroleum products, alcohol, natural gas and octroi that may remain out of the GST net. There are many levies in the states ambit that still remain to be decided upon.

Consensus has been hammered out on many of the structural issues as well, like a common threshold limit for exemption and dual rate. The list of exempt items to usher in the indirect tax regime of GST also will be pruned. The list could be smaller by as much as possible from the current 350 items.