States firm on exclusion of petroleum products; want entry taxes kept out

Compensation issues and differences over the treatment of petroleum products remain the main hurdles before early implementation of the Goods and Services Tax (GST), even as the Centre and States appeared optimistic in overcoming these challenges.

Many States on Thursday pitched for the exclusion of petroleum products and entry taxes from the purview of the GST regime. Some of them even wanted this position to be clearly reflected in the Constitutional Amendment Bill.

Ready to engage

On its part, the Centre did not commit on these crucial issues, but was ready to engage with the States with an “open mind” on the matter.

If compensation issues are resolved, then half the job on GST is done, said Finance Minister Arun Jaitley.

The discussions between the Centre and States at the meeting revolved around the contentious GST details and not on the Constitutional Amendment Bill.

One thing that came out clearly after Jaitley’s meeting with State Finance Ministers was that the Centre would prefer to first sort out the thorny GST issues before delving into the Constitutional Amendment Bill.

No commitment

“We have not committed this way or that way,” said Nirmala Sitharaman, Minister of State for Finance, addressing newspersons when asked whether the Centre had relented to States’ demands.

Sitharaman, who attended the meeting along with Jaitley and other senior Finance Ministry officials, said that the Centre wants to move from one milestone (sorting out thorny issues around GST) to another (Constitutional Amendment Bill).

Walk with States

“Our (Centre’s) intent and commitment in moving towards positive and speedier resolution of GST are very clear. We want to work with the States,” she said, while declining to be drawn into timelines for implementation of the Goods and Services Tax.

Billed as the biggest tax reform ever to be undertaken by India, the introduction of GST is being seen as a “game changer” that could propel the country’s economic growth.

The Centre’s commitment for early resolution of GST matters can be gauged from the fact that Jaitley was discussing the GST issue with the State Finance Ministers for the second time in a month. The first meeting was part of the pre-Budget consultations he had with these Ministers recently.

Sitharaman said that “compensation” remained a major concern of the States. “It is an issue we had inherited and will have to work on it.”

States’ view

Earlier in the day, Empowered Committee Chairman and Jammu and Kashmir Finance Minister Abdul Rahim Rather expressed confidence that GST could be implemented once the concerns of the States were examined and resolved.

“Every State wants GST to be implemented. Only, they want their concerns to be addressed. That will be done I think,” he told newspersons after a meeting of the Empowered Committee.

(This article was published on July 3, 2014)
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