GST must reduce prices, and language of amendment should be clear: Amit Mitra

Says, the West Bengal govt was supporting the GST as it would affect the common people positively by reducing prices

Amit Mitra, Chairman of the Empowered Committee of State Finance Ministers on goods and services tax (GST) on Wednesday cautioned that there should be no ambiguity in the fine-print of the GST, as it could mean revenue loss for the states.

The West Bengal government was supporting the GST as it would affect the common people positively by reducing prices, said Mitra.

"The idea of GST is to have a tax that does not lead to inflationary pressure for the common man. However, the rates should be such that there should not be any loss for state revenue. The rates will not be debated today in Parliament, but it should happen in two-three months," said Mitra addressing the Federation of Indian Chambers of Commerce and Industry (Ficci) Banking Conclave here on Wednesday.

"GST has a political economic dimension. It is a tax that must positively affect common people in terms of reducing prices," he added.

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However, Mitra warned that the fine details of GST should be written in clear language with no ambiguity. Elaborating on how ambiguous use of words could lead to misinterpretation of it, he said, "Today the key point is safeguarding states' interest. The language of the constitutional amendment has to be 100 per cent clear. For example, in government files, we often see the use of the word 'may'. In some legal terminology it may mean 'shall'. If it means shall, why not call it 'shall'. I hope, by the end of the day, the language of the constitutional amendment comes out as 'shall', said Mitra.

Giving an example of how ambiguity could lead to revenue loss for states, Mitra said, in the case of Central and Sales Tax (CST) rate reduction from 4 per cent to 2 per cent, the Centre had abruptly stopped compensating the states as there was no constitutional amendment for CST compensation.

As GST was set to become a reality, Mitra reminded the gathering how West Bengal government had emerged as a key supporter of GST.

"Our party supported GST since as early as 2009. Not many political parties did so at that time. The primary focus of that support was small and medium enterprises. In 2009, Mamata Banerjee felt that a single tax will be most beneficial for SMEs, ' said Mitra.

In June this year, West Bengal Chief Minister Mamata Banerjee at an industry meet had asked Mitra to expedite the passage of the GST. In July, Mitra along with Union finance minister Arun Jaitley and state finance ministers held a meeting on GST in Kolkata. Soon after the meeting, Mitra announced that almost all states in-principle had agreed to GST with consensus on major issues.