ADVERTISEMENT

GST Bill: Centre, States Agree on Lower Tax Rate, Compensation For States 

Wording for the five-year compensation to be paid to the states has been worked out.



Union Finance Minister Arun Jaitley during a meeting with the Empowered Committee of State Finance Ministers at Vigyan Bhawan (Photographer: Shahbaz Khan/PTI)
Union Finance Minister Arun Jaitley during a meeting with the Empowered Committee of State Finance Ministers at Vigyan Bhawan (Photographer: Shahbaz Khan/PTI)

In a decision that could help push the Goods and Services Tax (GST) Bill through Parliament, the Centre and states today agreed on the principle that the tax rate will be lower than the existing level. Broad consensus emerged that the rate should not be part of the Constitutional Amendment Bill.

The wording for the five-year compensation to be paid to the states for losses incurred due to GST has been also been worked out, West Bengal Finance Minister Amit Mitra told reporters after a meeting of the Empowered Committee of State Finance Ministers, chaired by Finance Minister Arun Jaitley.

“As far as the GST rate is concerned, a broad consensus has been laid out, where the common man does not face the current high taxes, and states do not lose out on revenue,” said Mitra, who is also the Chairman of Empowered Committee of State Finance Ministers.

He added that businesses earning less than Rs 1.5 crore turnover will be under state control, and those above that will be jointly controlled by states and the Centre.

“Above 1.5 crore, a smooth consistent methodology has been worked out in which states and the Centre will be able to work shoulder-to-shoulder with regard to the question of revenue generation,” he said.

This, he said will not be a part of the Constitutional Amendment Bill, and will go into the GST Act.

The government is keen on passing the GST Bill in the current monsoon session of Parliament which ends on August 12. The Opposition has been demanding a lower GST rate and scrapping the additional 1 percent tax on inter-state sales.