State finance ministers meet Oct 27 on GST

The empowered committee of state finance ministers will meet in New Delhi on October 27 to give another push for reaching at a consensus on the proposed Goods and Services Tax (GST) regime.

"We are meeting again on October 27," chairman of the group Asim Dasgupta said here today.

His statement came a week after the last meeting of the group failed to arrive at a concensus.

The roll out of GST from the scheduled date of April 1, 2011, has hit political roadblock as BJP-ruled states, along with some others continue to oppose the draft of the Constitution Amendment bill.

The empowered committee of state finance ministers had last met in the national capital on September 20 to discuss the revised draft bill but ended without a consensus as the BJP-ruled states resisted the draft on fears that it would encroach states' fiscal autonomy.

DMK-ruled Tamil Nadu and BSP-administered Uttar Pradesh had also opposed the draft.

At present, states cannot impose service tax, which is why the Constitution Amendment bill is required. The bill is also needed to allow the Centre impose a tax beyond manufacturing.

"There are some problems but we will reach a consensus. The number of states unable to agree is not more than five," Dasgupta said.

Asked about the problem areas, Dasgupta said among others, the states have difference of opinion about the scope and power of the GST Dispute Settlement Authority.

Earlier, Madhya Pradesh and Gujarat had suggested alternative GST model.

After the last meeting of the empowered committee, official sources had said BJP-ruled states did not agree to the GST Dispute Settlement Authority, proposed in the draft, saying it would infringe on their fiscal autonomy.

The authority is proposed to settle the dispute between states, or between states and the Centre.

"States' concerns are basically for retaining and upholding fiscal autonomy and also retaining some flexibility in the system so that if there is any natural calamity, states will have to take recourse to additional tax measures. States want that legislature of states to be given primacy, which is there currently," Dasgupta had said last week.

The Empowered Committee had discussed the revised draft of the Centre, after the first one was rejected by states alleging it proposed giving veto power to the Union Finance Minister on states' taxation issues.