State FMs to meet on Sept 20 on GST

The State finance ministers are likely to meet on September 20 to discuss the constitutional amendments needed to roll out the proposed Goods and Services Tax (GST).

"The state finance ministers would meet on September 20 to discuss the re-revised draft of the Constitution Amendment Bill on Goods and Services Tax (GST)," a source told PTI.

However, according to sources, the meeting is unlikely to yield much results as the BJP-ruled states are firm on their views to oppose the existing structure of the proposed indirect tax regime.

"We do not support the existing structure of GST, as it would hamper the state autonomy. We would oppose it in the present form," Madhya Pradesh Finance Minister Raghavji said.

GST is likely to miss the April 1, 2011, deadline as the constitutional amendment bill on GST could not be introduced in the monsoon session.

The indirect tax regime is expected to replace excise duty, service tax on the Centre's end and VAT on the states front, besides local levies, cesses and surcharges.

The BJP-ruled states had objected the revised draft of the GST, saying it does not clarify how the changes will be brought about in the GST structure.

The earlier draft was rejected by the states on account of the proposed vesting of veto powers with the Union Finance Minister on state taxation issues.

The first draft had proposed setting up of a GST Council to take decisions on GST with the consent of the Union Finance Minister and a two-third majority of states.

The revised draft, however, said the council could take a decision only when there is a consensus.

However, BJP-ruled states wanted to know the clear meaning of consensus and suggested changing this word with "consent". Both the drafts have also suggested a dispute settlement mechanism.

Mukherjee had said a third revised draft would be prepared to sort out states' concerns and the Finance Ministry officials have started preparing it.