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Budget 2013: GST stuck between states' demands, India Inc's pleas

Jan 17 2013, 20:54   |   By CNBC-TV18

A key proposal that is expected to be discussed and enacted at the Budget Session is the Goods and Services Tax (GST). However, the government does seem to want to fasttrack GST. The GST panel meet in Delhi on Wednesday coincided with the state finance ministers' meet, reports CNBC-TV18's Aakansha Sethi, quoting sources.

Industry representatives stated that they would like to see the government move to fasttrack the rollout of GST. Chidambaram had set up two committees in this regard but the deadline has been constantly extended.

However, Sushil Modi has stated that there a consensus on GST has been reached amongst the states except on three key issues- fiscal autonomy, revenue-neutral rates and items to be included in GST list.

Sources indicate that several states especially those ruled by the Bharatiya Janata Party (BJP) such as Madhya Pradesh and Gujarat are still opposed to GST.

Sources add that within the committee there is contemplation on the idea of a phased rollout for GST similar to the phased rollout for value-added tax (VAT). The members are of the opinion that a phased rollout of GST will be economically compelling for state-governments to adopt into the GST model because no state-government can afford a lower rate and if there is a higher rate, it will mean a shift of investment to states with the GST rate.

However, it remains to be seen if that is actually a viable option that can be worked out, but sources point out that the finance minister could announce a broad roadmap for GST in the forthcoming Budget if a consensus was reached amongst the states when they meet on January 28 and 29 in Bhubaneswar - a meeting that Parthasarathi Shome who has been key to the rollout VAT will also attend.


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