The fate of the goods and services tax (GST) regime remains uncertain as the meeting between the Centre and the States remained inconclusive. However, both sides maintained that the talks were progressing in the right direction.

The meeting was to enable the introduction of the Constitutional Amendment Bill during the ongoing session of Parliament. The Centre aims to introduce GST from April 1, 2016

Finance Minister Arun Jaitley here on Monday discussed the broad contours of the Bill with the Empowered Committee of States’ Finance Ministers.

“We are moving in positive direction,” Chairman of Empowered Committee Abdul R Rather told reporters without giving details.

It seems that the Centre has promised to pay compensation to States for five years on account of revenue loss incurred due to shift to the new tax regime. This will be done through provisions in the legislation, giving a kind of surety.

Another compensation which is to be paid is on account of phasing out Central Sales Tax (a tax levied on inter state trades).

Phased payment

An amount of ₹34,000 crore is due on this account. Both the Centre and the States have agreed on payment spread over three years. Accordingly, the Finance Minister has promised to pay ₹11,000 crore in this fiscal year ending March 31, 2015 itself .

Though, the States were insisting for keeping petroleum products outside the ambit of GST, the Centre has rejected this demand. It will be part of GST with ‘nil’ rate.

Some States were insisting on keeping alcohol and tobacco outside GST. Both the Centre and States have agreed to keep alcohol out of GST, which means both will have freedom to levy duty. However, tobacco will be part of GST as currently, it is the Centre which levies duty on it.

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