In a big setback to government aiming to implement GST soon, states rejected the draft of Goods and Services Tax (GST) Bill, underscoring that it does not address their concerns, particularly on entry tax and taxation of petroleum products.
During a meeting, the government’s plan to bring petroleum goods under GST regime was strongly opposed by the Empowered Committee of State Finance Ministers. The states also objected to the Constitutional Amendment Bill saying it does not contain provisions for giving states compensation against any possible loss of revenue after GST roll-out for five years. The state governments want to keep the entry tax and petro tax out of the ambit of the GST. The GST roll out has missed several deadlines because of lack of consensus among Centre and states over certain crucial issues like CST compensation. However, the government is taking steps to build consensus among states and centre for GST rollout. Finance Minister Arun Jaitley had recently announced that the government will soon release Rs 11,000 crore towards Central Sales Tax (CST) compensation and balance amount will start being paid from the next financial year.
The proposed GST is one of the biggest taxation reforms in India and will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT) and will integrate State economies and boost overall growth. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. The industry is awaiting its introduction, as GST would boost revenues and aid economic growth.
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