Centre, states to discuss GST Amendment Bill on Aug 18

Finance Minister Pranab Mukherjee is likely to meet the state GST panel on August 18 to discuss the revised draft of Constitution Amendment Bill so as to allay fears of states on providing veto powers to the Centre.

Sources said the revised draft will change the structure of the GST Council, which was apprehended by states as a body that provided a veto power to Union Finance Minister over states on taxation issues.

"The Finance Minister would meet state finance ministers on August 18 to discuss the revised constitutional amendment draft for GST, in which states fear of veto power to Union Finance Minister would be removed. Dispute settlement mechanism would also go," an official source told PTI.

Before meeting Mukherjee, state finance ministers will meet among themselves on the same day to discuss the revised constitutional amendment draft to implement GST.

Efforts to introduce GST from next fiscal received a setback last week after states opposed a draft bill to amend the Constitution in its present form, saying it provides a veto power to the Union Finance Minister in matters relating to state subjects.

"This proposed draft Constitutional Amendment Bill related to GST in its present form is not acceptable to the states," Asim Dasgupta, Chairman of the Empowered Committee of State Finance Ministers on GST, had said after a meeting of the panel.

He had said states are against infringement on their financial autonomy and have certain reservations on the draft bill's provisions for GST Council and the GST Disputes Authority.

The draft proposed a GST council that would have members from states and the Centre with each member having veto power. For any dispute, there would also be a dispute authority, according to the proposed draft.

States fear giving a veto power to Union Finance Minister on state taxation issues will cut their fiscal autonomy.

Dasgupta added states also feel that GST Disputes Authority should not find a place in the Constitutional Amendment Bill and may be incorporated in GST legislations.

Later, Mukherjee said he doesn't intend to be a 'Super Finance Minister'.

"I have no intention of becoming the super Finance Minister to interfere with the state GST," he had said in Parliament during debates in Rajya Sabha and the Lok Sabha.

"They (states) will have their rights and I shall have my rights...They have a responsibility to their states. That basic structure cannot be altered", he had said replying to a debate in the Rajya Sabha on price situation.

After that meeting, the Finance Ministry started redrafting the Constitution Amendment Bill to allay states fear over the veto power to the Union Finance Minister.

GST, the new indirect tax regime will subsume the excise duty and service tax at the Central level and value-added tax at the state level, besides the cess, surcharges and local taxes.

Last month, Finance Minister Pranab Mukherjee proposed a three-rate structure for GST -- 20 per cent for goods, 12 per cent for essential goods and 16 per cent for services.

The differences between the Centre and states over GST structure has already delayed its introduction by a year. Against this financial year, it is now proposed to be introduced from 2011-12.