Pranab to meet state FMs tomorrow on revised GST draft

The Centre will meet states tomorrow to resolve all outstanding issues, including rates, on the draft Constitution Amendment Bill for the proposed Goods and Services Tax (GST) where it has already dropped the contentious veto power sought for it on fixing levies.

The centre is trying to resolve all differences with states so that it can introduce the enabling Constitution Amendment Bill, for rolling out the GST, in the current monsoon session of Parliament that is just 10 days from being over.

If the draft is accepted by states, it is likely to be sent to Cabinet approval soon for tabling it in the monsoon session.

The revised draft has dropped the contentious issue of giving veto powers to the Union Finance Minister in order to bring states on board.

With states rejecting the earlier draft on the ground that giving veto powers to the Union Finance Minister would interfere with their fiscal autonomy on indirect taxes, the new draft of the Bill proposes that all states, along with the Centre, would have to agree on a decision in the GST council to make it effective.

This way, the council would become a recommendatory body, rather than mandatory, as proposed in the original draft.

"We have addressed the concern of the states and expect positive response from them. If they agree with the Centre's proposal, we can place it before the Cabinet," a key finance ministry official told PTI.

However, Madhya Pradesh Finance Minister Raghavji wants more clarity on the issue.

"There has been no mechanism suggested on what would be done if there is no consensus," he added.

Meanwhile, the BJP has called Finance Ministers of eight NDA—ruled states for a meeting to discuss the indirect tax reform and build a consensus in its favour.

Before meeting Pranab Mukherjee tomorrow, state finance ministers will meet among themselves to discuss the revised Constitution Amendment draft to implement GST.

Earlier, efforts to introduce GST from the next fiscal received a setback after states opposed the original 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 Constitution Amendment Bill related to GST in its present form is not acceptable to the states," Asim Dasgupta, the 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 the GST Council and the GST Disputes Authority.

The draft had proposed a GST council that would have members from the states and the Centre, with veto power given to the Union Finance Minister.

For any dispute, there would also be a dispute authority, according to the proposed draft.

States feared that giving a veto power to the Union Finance Minister on state taxation issues would curb their fiscal autonomy.