Arun Jaitley on Friday said he would try to introduce the Constitution Amendment Bill for GST in the current session of Parliament.
A day after holding two rounds of talks with the state governments that continue to be chary about the proposed Goods and Services Tax (GST), finance minister Arun Jaitley on Friday said he would try to introduce the Constitution Amendment Bill for GST in the current session of Parliament so that it could be discussed and considered in the next session.
The empowered committee (EC) of state finance ministers that met here on Thursday resolved to resist the Centre’s plan to include taxes on petroleum products and municipal taxes in the GST and insisted the Bill should provide for a five-year compensation mechanism for states to make up for any loss of revenue. While the Centre is favourably looking at the latter demand, it is still averse to exclusion of petroleum taxes given it could lead to cascading of taxes at some industrial segments and undermine the structure of GST.
Even if the Centre and states manage to resolve their differences and the Bill gets introduced in the current session, it may be referred to the standing committee on finance. The earliest opportunity for passage of the Bill is in the Budget session.
As for inclusion of petroleum taxes, states are reluctant to even tread the middle path suggested by the Centre, which is to include petroleum taxes in GST and keep the rates nominal or even zero so that states can levy supplementary taxes sans input tax credit.
Sources said the Centre and states are planning to apply the revenue neutral GST rate for petroleum products and allow states to levy a non-Vatable tax within a narrow band over and above that. The proposal of zero-rating had caused the states to apprehend that they would require to pay input tax credit for businesses with petro goods as inputs.
As reported by FE earlier, in order to get the states on board for this crucial tax reform, the Centre has agreed to many of their suggestions. Jaitley said a sum of R11,000 crore would be sanctioned immediately to the states to make good for the losses in their central sales tax (CST) revenue.
The Centre is also willing to put its share of revenue from inter-state GST in the divisible pool, rather than solely in its own kitty.
EC chairman Abdul Rahim Rather said after late-evening meeting with Jaitley on Thursday that some headway was made on many issues. He added that states finance ministers would meet Jaitley again within a week to finalise the features of the Constitutional Amendment Bill.
At a conference organised by a TV channel, Jaitley said he was hopeful of achieving an economic growth rate of 6-6.5% in the next fiscal and over 7% thereafter. He said the government would take more steps to streamline public expenditure and rationalise subsidies after receiving the report of the expenditure commission. “We are working overtime on reforms… insurance Bill will be taken up next week,” Jaitley said.