Centre and states have reached a consensus on Goods and Service Tax, or GST, and reservations regarding producing and consuming states have been sorted, says KM Mani, chairman, state finance ministers panel on GST. He says interest of both producing and consuming states will be protected.
He is hopeful that GST will be brought into force from April 1, 2016. Also, he is looking at a uniform GST rate throughout India.
According to him, a decision on revenue neutral rate for GST is yet to be taken.
Mani says finance minister Arun Jaitley has said that the Constitution Amendment Bill will be pushed through in this session itself. There is no difficulty with regard to 50 percent of state legislatures passing Constitutional Amendment Bill, he says.
Below is the verbatim transcript of KM Mani's interview with CNBC-TV18’s Sapna Das
Q: Tell us about the passage of the Constitutional Amendment Bill in this session
A: Even the finance minister himself has said that the Constitution Amendment Bill will be pushed through this session itself. Of course I hope that it will be immediately passed by both houses of the Parliament and then it has to be got ratified by more than 50 percent of the legislature. That can be done because there is no difficulty with regard to that. I hope that according to the schedule it can be brought into force on April 1, 2016, and scheduled before. I am hopeful about that.
Q: What was the main issue that was flagged off today apart from building absolute support for the bill? Were there individual issues also discussed like purchase tax, like tobacco, etc, petroleum products?
A: There are some producing countries and consuming countries. There were certain reservations but all are sorted out now. We are arriving at a consensus decision and the sentiments of the growing states will be addressed and the consuming states also, both interest will be protected, there is no difficulty with regard to that. The goods and service tax (GST) is mutually beneficial, both to the Centre and the state. With the emergence of GST we will be opening a new regime in the taxation area, a new era in the taxation regime because so far the states had no authority or powers to levy tax on service and the Centre had no powers to levy on goods. Now, both state and Centre get that power. Therefore is is mutually beneficial. More than that there will be a uniform growth throughout India.
Q: A uniform rate?
A: Uniform. With globalisation all the countries of the world have become one market. In the emergence of GST all Indian states will be one market.
Q: One quick question you spoke about one uniform rate for GST. What would be a reasonable band? We understand that this matter is under discussion and only the GST council at a much later stage will take a call on this, but what could be a reasonable band that is one. Second, how do you plan to protect the consumers from a sudden rise in the service tax rate because finally the central excise and the service tax rate are going to be combined because states will also get their powers to levy service tax.
A: Those things, many things have to be sorted out. Because we are in the making of the Bill. Therefore all these subjects will be discussed and consensus decision will be taken.
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