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Government is Loosing its Momentum on GST

Nagesh Bajaj 
on 18 December 2010

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The idea of dropping the most quarrelsome issue of Constitutional Amendment from the recently concluded meeting of the Empowered Committee of the State Finance Ministers didn’t work well for the Government as it also failed to provide any fruitful results. So, we have to wait more for the new tax regime which is expected to replace excise duty, service tax on the Centre’s end and VAT on the States front.

 

In the last meeting of the Empowered Committee of the State Finance Ministers, the major area of the discussion was the GST structure but here also states seemed to lack a clear picture on issues such as Threshold level, GST on inter-state movement of goods, certain exemptions and rates. The Centre wants to have a uniform limit of threshold for GST. On the other hand, states want different threshold level for SGST and CGST. The states have been asking for a threshold of Rs 10,00,000 for SGST and Rs 1.5 crore for CGST .

 

Mr. Pranab Mukherjee efforts towards the implementation of the Goods and Service Tax  also gets a fresh setback from this meeting as the interests of the States in the GST seems to be diminishing with the passage of time. Just about eight State Finance Ministers including  West Bengal, Jammu & Kashmir, Punjab, Uttar Pradesh, Haryana, Tamil Nadu, Meghalaya and Assam were turned up for giving their comments on the GST issues whereas this number was around twenty ministers in the earlier meetings of the Empowered Committee. However, those states which failed to attend the meeting sent their officials for the makeover of their absence.

 

Earlier, our Finance Minister Mr. Pranab Mukherjee said that the Politics seems to be creating a hurdle in the rollout of the Goods and Services tax as the Government have already compromised a lot to accommodate the concerns of the States. Now his statements are looking totally correct as Finance ministers of the Bhartiya Janata Party (BJP)-ruled states were not present in the recently concluded meeting of the Empowered Committee of the State Finance Ministers.

 

In July, Mr. Pranab Mukherjee  proposed a three-rate structure for the Goods and Services Tax -- which will simplify the indirect tax regime -- under which goods will attract 20 per cent levy, services 16 per cent and essential items a concessional 12 per cent. Most states seemed to have no issue with the rates. However, Mr. Dasgupta said the rate structure would be discussed further, as some states were asking for more time to consider that structure. Some states were asking for a band of two per cent over and above the proposed rates so that they could have some flexibility to increase rates in the future.

 

This is a current position of Goods and Services Tax, when the two main pillars of the GST i.e. GST Council and the Dispute Settlement Body were not there in the agenda of the recently concluded meeting. All these ups and downs in the Goods and Service Tax are not only pinching the Finance Minister but also all those who have great interest in GST. Here we can take the example of those professionals who are doing practice in the indirect taxes as GST is expected to replace the Excise duty, Service tax on the Centre’s end and VAT on the States front. The Empowered Committee of State Finance Ministers will meet Finance Minister Pranab Mukherjee after the Winter Session to discuss a Constitutional amendment.

 

The dedications shown by the Finance Minister Mr. Pranab Mukherjee  towards the introduction of Goods and Service tax till now indicates that something is going to happen soon and that would also give the correct picture of the GST future. But, if the introduction of the GST get delayed further, then the Government will certainly looses all its momentum.

 

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Category GST
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