Finance Minister Arun Jaitley today said virtually all states, barring Tamil Nadu, have come on board on the new legislation and expressed hope to push the long-pending GST bill in the upcoming monsoon session.
After a meeting of Empowered Committee of State Finance Ministers here on the proposed nationwide common indirect tax, Jaitley also said the states’ fear of any revenue loss in the first five years has been addressed and the Centre would compensate for these losses.
“Virtually all the states have supported the idea of GST today, barring Tamil Nadu which has expressed some reservations. Tamil Nadu has offered a few suggestions which have been noted by the committee,” Jaitley told reporters on the first day of the two-day meet.
At their meeting, the state finance ministers also approved a model GST law, which said that sale of goods and services and all online purchases will attract GST at the first point of transaction and pegged threshold annual turnover for levy of the tax at Rs 10 lakh. The limit will be Rs 5 lakh in North East and Sikkim.
Jaitley said there is “no deadline as such” for the implementation of the Goods and Services Tax which aims to subsume a string of state and central level levies.
The government had earlier targeted to roll out the nationwide single tax regime from April 1, 2016 but the Constitutional Amendment Bill on GST has been stuck in the Rajya Sabha due to opposition by the Congress party.
Jaitley, however, rejected Congress’ demand for capping the GST rate, which has been the main issue of contention.
“There is a complete consensus on that, there should not be any such ceiling as exigencies may arise in future. Now it is left to the GST council,” he said.
The meeting was attended by Finance Ministers of 22 states, including West Bengal’s Amit Mitra as well as Chief Ministers of Arunachal Pradesh and Meghalaya, deputy CM of Delhi and senior officials of seven others.
Later in the day, Tamil Nadu Chief Minister Jayalalithaa met Prime Minister Narendra Modi in the national capital and told him that her state was “concerned about the impact the proposed GST will have on the fiscal autonomy of states and the huge permanent revenue loss it is likely to cause to a manufacturing and net-exporting state like Tamil Nadu”.
“The stand of Tamil Nadu government is that before the Constitutional Amendment Bill on GST is taken up, the Government of India should strive for a broad consensus on important issues like compensation period and methodology, revenue neutral rates, floor rates with bands, commodities to be excluded from GST… and clarity on dual administrative control,” she said in a memorandum to the Prime Minister.