FM Jaitley looks to break GST deadlock on Monday

Finance Minister Arun Jaitley will on Monday look to break the deadlock over the distribution of powers between the Centre and states to administer goods and services tax (GST), an issue that is holding up the launch of the new national sales tax from April.

The all-powerful GST Council, headed by Jaitley, will meet for the ninth time on Monday with the issue of who gets to administer GST being the single biggest issue on agenda.

The council has been deadlocked in the last four meetings, the last one being on January 4, with states seeking sole powers to control assessee with an annual turnover of up to Rs 1.5 crore.

Centre, however, is not in favour of a horizontal split as it feels states do not have the expertise to administer levies like service tax.

Jaitley is also not favour of dual agencies auditing and scrutinising each taxpayer as he reckons multiple authorities could end up acting at cross-purposes.

Jaitley had last week hoped to resolve the pending issues to get the new indirect tax regime rolling from April 1.

"Most of the issues have been sorted out, some critical issues remain and these critical issues over the next few weeks we will try and solve out," he said last week. "We would want it to be implemented from April if all issues are resolved."

The GST Council is also to discuss the taxation of trade in territorial waters. Also, the corpus to be created for compensating states for loss of revenue from GST rollout may figure in tomorrow's meeting, sources said.

The council had in the previous meeting agreed on most of the clauses of the draft Integrated-GST (IGST) law, which along with Central-GST (CGST) and State-GST (SGST) have to be passed by Parliament and state legislatures respectively before the new tax regime can be rolled out.

IGST deals with a levy on interstate supply (including stock transfers) of goods or services.

GST will subsume a host of indirect taxes levied by the centre and the states, including excise duty, value-added tax, service tax, entry tax, luxury tax and entertainment tax.

Parliament passed the landmark constitutional amendment in August last year and more than half of state legislatures ratified it by mid-September.

According to Jaitley, GST needs to be rolled out latest by September 16, 2017.

Under the Constitutional Amendment passed by Parliament for the GST implementation, some of the existing levies would expire after September 16.

GST would transform India into a single market, boost revenues through better compliance and simpler procedure.