The finance ministers of the National Democratic Alliance (NDA)-ruled states today met to discuss its stance on goods and service tax (GST).
Finance Minister Pranab Mukherjee is meeting state finance ministers tomorrow on this issue. The GST Bill is slated to be tabled in the Parliament during the monsoon session, scheduled from 26 July.
At the residence of senior Bharatiya Janata Party (BJP) leader LK Advani, the NDA-ruled state finance ministers discussed for nearly two hours on how to drive a hard bargain to lend their support to the bill. However, it was decided at the meeting that there would be no collective position and ‘definitely no NDA position’.
While Gujarat is committed to rolling out GST, states like Punjab (ruled by the Shiromani Akali Dal) and Uttarakhand (ruled by the BJP) were debating on the quantum of compensation they could get from the centre.
Taking a cue from Tamil Nadu, an ally of the ruling United Progressive Alliance (UPA), Madhya Pradesh, with low industrialisation and little value addition facility, is fighting tooth and nail against the bill. The state fears that with the introduction of the bill, it would lose revenue. State finance minister Raghavji today said, “The centre has not told us what the rate of taxation is going to be. Right now it is five per cent for some goods and 12.5 per cent for others. If this is going to be the rate, states will lose up to Rs 80,000 crore. Will the centre compensate us?”
However, states like Bihar are supporting the tax reform proposal. State finance minister Sushil Modi told Business Standard from Patna that states would immediately agree to GST, if the centres assured them that they would be compensated for five years in case of loss of revenue.
He said even Madhya Pradesh was not blind in its opposition to the tax reform. “Their position is unsustainable. They know that issues like challenging the base of GST will not wash. But their apprehensions are legitimate and the centre has to address them.”
Despite all posturing, most finance ministers present at the meeting were of the view that GST would be implemented whether they liked it or not. Many said they were already preparing themselves.
