Govt meets state FMs on pending areas in GST

The Union government on Friday discussed some “pending areas” in the proposed Goods and Services Tax (GST) with the empowered committee of state finance ministers, and asked it to resolve the issues at the earliest to meet the April 2011 deadline for the rolloutof GST.

Asim Dasgupta, West Bengal finance minister and chairman of the empowered committee met Finance Minister Pranab Mukherjee to discuss the unresolved issues, including Constitutional amendment and compensation to the states for meeting losses on account of GST.

The finance minister is also believed to have taken up with Dasgupta the areas of differences between the Centre and the states, including threshold limit, exemption list and revenue-neutral rate. According to people in the know, Mukherjee said the Centre was ready to compensate the states in the initial years, provided there was a consensus on the broad framework for GST, including an acceptable rate.

The meeting, which lasted for about half-an-hour at the finance minister’s North Block office, came just a week before the empowered committee's meeting with finance ministry officials on April 21. After the Budget in February, this will be the first meeting between the Centre and the states on GST.

“The meeting next Friday will discuss all relevant matters for the implementation of GST. As a preparation for that, we needed to have some interaction with the Union finance minister,” said Dasgupta after the meeting Mukerjee. He showed confidence that the revised deadline of GST implementation would be met. "That is our target and we will make all efforts to meet it. We are confident," he added.

The earlier deadline of April 2010 was missed as there was no agreement between the Centre and the states on many areas of GST. The new GST rollout deadline is just ten months away and still much progress has not been seen as far as areas of agreement between the two are concerned. The government is still discussing the options for amending the Constitution so that there is no legal dispute in future.

The empowered committee, in its first discussion paper on GST, had suggested that businesses below a gross annual turnover of Rs 1.5 crore will be subjected to GST only by the state and not by the Centre. The Centre, however, is strongly opposed to the idea as it would result in a substantial revenue loss, and said there should be a common threshold of Rs 10 lakh. The Centre has also said that it wants a common exemption list for both and an acceptable level of GST rate, against states’ demand of 18-20 per cent.