Govt in final stages of talks with states on GST: Jaitley

Hinting that amendments to the Goods and Services Tax (GST) may be introduced in the ensuing Winter session of Parliament, Finance Minister Arun Jaitley today said that the government was in the final stages of talks with states on the issue.

“I am in the last stage of my discussion with the states on the eve of Parliament session before introducing the amendments to the GST law in Parliament,” Jaitley said at the India Global Forum meeting here.

The month-long Winter Session of Parliament is scheduled to commence on November 24.

Seeking support from the Opposition parties, especially Congress, in passing the key legislation, Jaitley said they should realise that the “merits of some of these actions have positive attitude towards them’’.

“I do hope that my friends in the Opposition parties, particularly the principle Opposition, after a wasted opportunity when they were in government, spend a more fruitful tenure when they are in Opposition,” Jaitley said.

Goods and services tax

The Goods and Services Tax (GST) regime aims at subsuming most of the indirect taxes at the central as well as state level. The UPA government in 2011 had introduced a Constitution Amendment Bill in the Lok Sabha to pave the way for introduction of GST.

The GST rollout has missed several deadlines because of lack of consensus among states over certain crucial issues on the new tax regime.

Discussion on GST Bill

Pending since 2006, the discussion on GST Bill is stuck at a crucial stage where states have proposed to keep products such as petroleum, tobacco and alcohol out of GST ambit and had demanded the exemption list be included in the Constitutional Amendment Bill.

Talking about reforms, Jaitley said some are possible with a consensus and some others are more challenging.

“I have always believed that some reforms are easily possible ... I have clearly prioritised most of them... For next few months we have our plates reasonably full,” he said.

CST compensation arrears

Clearance of CST compensation arrears has been a bone of contention between the Centre and states, as the states still wait for Rs 13,000 crore arrears pending till 2010.

As regards the compensation structure, the states have sought a five-year compensation mechanism from the Centre and demanded the same be included in the Constitutional Amendment Bill.

CST, a tax imposed on the inter-state movement of goods, was reduced from 4 per cent to 3 per cent in 2007-08 and further to 2 per cent in 2008-09 after the introduction of Value-Added Tax (VAT). The Centre had then promised the states that it would bear losses due to reduction of CST.

As part of the roll-out of GST, the CST is being phased out and has been reduced to two per cent from the earlier four per cent. The Centre collects CST and distributes it among states.

While presenting the Budget, Finance Minister Arun Jaitley had expressed hope that the government would be able to “bring a final solution in the course of this year and approve the legislative scheme which enables introduction of GST’’.

GST, he had said, would streamline tax administration and avoid harassment of business and result in higher tax collection both for Centre and states.

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