Centre's promise to compensate revenue loss to states vital

GST Empowered Committee Chairman K M Mani today expressed confidence that states would be able to arrive at a consensus on Revenue Neutral Rate (RNR) that would not bring down their revenues while migrating to the proposed indirect tax regime.
However, Mani, who is the Kerala Finance Minister, said the Centre's promise to compensate any revenue loss to states was vital.
Inaugurating the two-day meeting of the GST Empowered Committee here, Mani said, "RNR will be so fixed that the GST will not bring down the states' revenues".
"The final icing on the cake is the promise of Union Government as reiterated by the Finance Minister number of times, to compensate any revenue loss to the states while migrating to GST for five years", Mani said.

"I feel and confident that there is adequate safety net for the states regarding the revenue concerns due to GST," he said.
Over and above, the Union Minister had emphasised that states could approach Centre for additional grant, if states continues to suffer loss, he pointed out.

With regard to the adequate layers of safety in the schemes, he said there were scope for widening of tax base, plugging the number of loopholes that exist in the present system through GST trail.
Mani said the Empowered Committee should move forward with positive notes with regard to concerns of state revenues and firm up the pending issues through deliberations and pave way for the smooth migration to GST.

He welcomed the passing of the GST bill by Lok Sabha yesterday and hoped that the government would be able to get the bill passed at the earliest in the Rajya Sabha also so that GST could be implemented by the targeted date of April 1, 2016.
Among the matters that needed consensus are tax structure on inter-state services, including transportation and communication, rate of tax on essential commodities, including food products and system of mechanism to collect tax.
Also pending is whether to include petroleum products and liquor in the ambit of GST.
Ministers and senior officials from various states including Finance Secretaries, tax commissioners were among those attending the meeting.