GST Council Still Scrambling For A Consensus On Dual Control And Compensation
The stalemate between the Centre and states threatens to delay the rollout till September.
The deadlock over the Goods and Services Tax continued on Wednesday with the Centre and states refusing to budge from their respective positions on issues like dual control and taxing high-sea trade. The definition of territory and cross-empowerment remained key pending issues at the end of the eighth GST Council meeting, Finance Minister Arun Jaitley told reporters at the press briefing.
The stalemate between the Centre and states threatens to delay the rollout till September.
The finance minister said the initial 10 of the 11 chapters of the Integrated GST Law have been approved. A draft with the undecided issues has been sent for legal vetting, after which it will be circulated among Council members for approval. Jaitley classified these undecided issues under two heads:
- definition of territory
- cross empowerment
The Council took up the demand of coastal states that GST be levied on trade of goods within 12 nautical miles offshore. The finance minister said the issue of whether tax on high seas is under the Centre or state’s jurisdiction is close to a resolution, and a constitutional solution must be found for it. This issue is currently pending before the Supreme Court.
The other big issue of cross-empowerment will be addressed by the GST Council once again when it meets next on January 16, Jaitley said, adding that “we will try to untie the knots as far as this (cross-empowerment) issue is concerned.”
Jaitley said the Council would like to avoid voting at this stage, as a discussion would let the members explore all the possibilities.
Pre-Budget Meeting With State FMs
GST compensation is not linked to demonetisation.Arun Jaitley, Finance Minister
The issue of compensation to states for revenue losses once GST is rolled out, is back on the table in the wake of the government’s demonetisation decision. States like Kerala and West Bengal have demanded higher compensation citing lower revenue collection. On Tuesday, West Bengal Finance Minister Amit Mitra had said that tax collection in the state fell 2 percent in November versus 11 percent growth a year ago. He had also pegged the quantum of compensation at as high as Rs 90,000 crore.
Ahead of the FM’s briefing, Delhi Deputy Chief Minister Manish Sisodia had said in an interaction with reporters that the Centre should make provisions for increased compensation in the Union Budget.
During a pre-Budget meeting with state finance ministers after the GST Council meeting got over, the finance minister asked states to provide details of the total tax collected in the month of November, as well as the last 2-3 years to assess the impact of the demonetisation. “GST compensation is not linked to demonetisation,” Jaitley said at the press briefing.
The Centre will exceed Budget estimates both in terms of direct and indirect tax collection for the current financial year, he added.
Responding to concerns that some states will see a decline in revenue collection on account of the cash crunch, Jaitley said, “Unless some state is badly administered and loses out on investment, the revenue (collection) of others is going to increase.”
Jaitley ruled out the possibility of postponing the date of the Union Budget, which is scheduled to be tabled on February 1, just days ahead of the first phase of polling in five states. He maintained that there was no need for a delay, despite some opposition parties writing to the President and the Election Commission, citing a violation in the model code of conduct which came into effect from Wednesday. The Cabinet Committee on Parliamentary Affairs has recommended holding the Budget Session from January 31. The government is likely to table the Economic Survey followed by the Union Budget on February 1.
Even in 2014, the budget was presented before the polls...These are the same parties which say there has been no positive effect of demonetisation so why are they worried about date of Budget.Arun Jaitley, Finance Minister
Assembly elections in Uttar Pradesh, Punjab, Uttarakhand, Goa and Manipur will be held between February 4 and March 8. While polling will be spread over seven phases in Uttar Pradesh, it will be a one-day affair in Uttarakhand, Punjab and Goa, and a two-day exercise in Manipur. Counting of votes will be taken up together in all the states on March 11, the Election Commission announced today, setting in process the mega political exercise in the new year.