The states are likely to take a call on Monday on the Centre?s compromise proposal to use the words ?consensus of all? in relation to the decisions of the centre-state council in the draft constitutional amendment bill for introducing Goods and Services Tax (GST). The change was proposed by the Centre after some states opposed the draft bill for amendment that said that any decision regarding rates and structure of GST will be decided by the GST council.
The draft in a way had given a veto power to the finance minister regarding decisions for the GST regime, which the states did not agree to. Now the Centre has proposed to decide on important matters like tax rates by consensus of all the members of the GST council?state finance ministers and the Union finance minister and the minister of state for finance. States are expected to take a view on the proposal in the meeting of the empowered committee of state finance ministers on GST.?The states have been concerned about losing thier fiscal autonomy. The meeting is also expected to take a decision on the Dispute Settlement Mechanism for any deviation in future that the States or the Centre may do during the GST regime. The states did not accept the proposal of the draft bill to have a GST Dispute Settlement Authority.
GST, the countries biggest indirect tax reform, has been pending introduction for some time now with the states and the Centre not arriving at a consensus on the structure and mechanisms for GST. The government was all set to table the draft bill in the last Parliament Session but could not do so. This delayed the implementation of the tax regime scheduled from April 2011.
The Centre has, however, been working hard to ready itself for the indirect tax regime. It includes the IT framework that would be very essential for having a smooth GST framework. The IT group led by Nandan Nilekani will make a presentation to the GST panel on Monday. It will update it on the IT process that has been worked out till now.
Goods and Services Tax will do away with most of the indirect taxes levied by the Centre and the States. The GST has already arrived at a list of taxes that would be subsumed in the GST model of taxation. As far as the rates are concerned, there would be a standard rate, a reduced rate and another rate for services. The tax structure is expected to swell the tax base, increase revenues and put less burden on the pocket of the tax payer. GST would be one indirect tax to be pais by the taxpayer and not a host of state and cenral taxes that he pays now.
