Modi's ouster may complicate GST riddle

The roll-out of the Goods and Services Tax (GST), which has already seen numerous delays, is likely to be hit by another salvo if Sushil Kumar Modi, deputy chief minister and finance minister of Bihar, quits as head of the group of state finance ministers, in case the Janata Dal (United) and the Bharatiya Janata Party part ways tomorrow.

Earlier, Prime Minister Manmohan Singh had said GST could be rolled out after the general elections in 2014.

Initially, it was planned GST would be rolled out on April 1, 2010. A Constitution amendment Bill was tabled in Parliament by former finance minister Pranab Mukherjee in this regard, and the parliamentary standing committee on finance is likely to give a report on this in the monsoon session of Parliament.

Analysts say the tussle between the Centre and states over compensation for loss of revenue due to a cut in central sales tax and demands for an independent mechanism for compensation due to the GST roll-out might worsen after Modi quits the empowered committee of state finance ministers on GST.

They said for state-level value-added tax (VAT), too, much bargaining was seen between the Centre and states. When VAT was introduced, Asim Dasgupta, then West Bengal finance minister, was at the helm of affairs of the empowered group of finance ministers. He continued to head the committee till all states joined the new tax system.

However, GST saw much change in the committee of state finance ministers. After the Left front government lost the 2011 assembly elections in West Bengal, Dasgupta quit the committee. Now, it is likely Modi is on his way out.

GST DEADLOCK

• Then FM P Chidambaram proposed to roll out GST for the first time in 2006-07 Budget
• The initial roll-out date was April 1, 2010
• The original deadline was missed and implementation is still not in sight
• PM said could be rolled out after 2014 Lok Sabha polls
• Modi said 80% of GST work was over
• Chidambaram said 70% of GST work was through