There is some development on the most-sought after GST front. Rashmi Verma, additional secretary, revenue, says certain decisions have been taken on the mechanics of GST - including rates and structure of GST, place of supply rules. She adds that the basic issue worrying the states is fiscal autonomy. States want additional resources under the devolution formula of the finance commission.
Verma says the nature of GST compensation will be temporary and the Centre has offered GST compensation for three years to the states. She believes there is no need for provision of GST compensation in the constitution.
The floor rate for GST will be in the 1-2 percent range, she adds.
There have been reports that the government is planning to table the Constitutional Amendment Bill on GST during the current session of the Parliament, once the cabinet gives its go ahead to the bill. The Narendra Modi government plans to share the Bill draft with state finance ministers by December 12 and immediately after that, it will be sent to the Cabinet and once the Cabinet clears it, it will be sent and tabled before the Parliament.
But the government is now going all guns blazing in its efforts to pass the Bill in the current (winter) session, according to finance ministry sources. The government also believes the Bill will not have to go back to the standing committee as that process is already over.
Verma says she is also working on an autonomous GST fund through central legislation and is committed to compensating the states on CST arrears. She understands that there is fear of revenue loss for manufacturing states and to tie the loose ends, she wants constitutional provisioning for GST revenue loss for such states.
The government has arrived at an agreement on revised draft Amendment Bill for GST and it has been sent for legislative vetting. However, she adds that consensus has been reached on petrol products, entry tax and compensation fund. She hopes that the draft Bill will be taken to the Cabinet post Arun Jaitley's meet with states.
Verma believes GST will be good for small traders as they will be subjected to one authority for ease of business. Only alcohol will be kept out of GST.
Arun Jaitley will chair state finance ministers’ meet on GST on December 11. On Monday, Jaitley had said that he will try and introduce GST (Goods and Services Tax) Bill in this session. "GST Bill would be taken up by the Cabinet after Empowered Committee (of state finance Minister) meeting on December 12," he had said yesterday.
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