States oppose GST Bill over tax issues, compensation for revenue loss

Entry tax and taxation of petroleum products.are sticking points, as is compensation for loss of revenues after GST rollout

In a setback to the Centre, states today rejected the draft Goods and Services Tax (GST) Bill saying it does not address their concerns, particularly on entry tax and taxation of petroleum products.

At a meeting of the Empowered Committee of State Finance Ministers, the Centre's plan to bring petroleum goods under GST regime was opposed.

They also objected to the the Constitutional Amendment Bill as it does not contain provisions for giving states compensation against any possible loss of revenue after GST roll-out for five years.

"There is no consensus between the Centre and states on these three things (compensation issue, petrol tax and entry tax). The Empowered Committee is not supporting the Bill without these three things," Empowered Committee Chairman Abdul Rahim Rather said after a meeting of the state Finance Ministers.

The central government, he stressed, "will have to respect views of the states."

The states want that the Centre to compensate them for any loss of revenue on implementation of the GST for five years and a clause regarding the compensation be included in the Constitution Amendment Bill, Rather said.

The state governments are also keen on keeping the entry tax and petro tax out of the ambit of the GST.

In a bid to roll out the GST, which would subsume excise and service taxes, the Centre has come out with a new Constitutional Amendment Bill.

"Government hasn't agreed to our recommendations made last time, except one recommendation. We had said that the share of Union government in GST should go to the divisible pool and should be devolved among states , that has been agreed by Centre," Rather said.