New Delhi, Aug. 7: The implementation of the goods and services tax (GST) could get delayed further with the parliamentary standing committee today suggesting amendments to provisions in the bill relating to the tax structure and the dispute resolution mechanism.
The committee, headed by former finance minister Yashwant Sinha, said the constitutional amendment bill should not include specific aspects relating to tax rates, exemptions, exclusions, thresholds and administrative arrangements. It also wants the entry tax to be subsumed in GST.
Like the “European model, there could be a floor rate and a ceiling rate within which the states will have the freedom to have a high or low rate,” the panel said.
“States should be allowed the choice to enter into GST just like it was provided in the value-added tax (VAT),” it added.
The committee also pitched for suitable amendments to provide for an automatic compensation mechanism through the setting up of a GST compensation fund, which would be administered by the GST council. It is expected to address revenue concerns of states.
The creation of a monitoring cell has been proposed to oversee the impact on key aspects such as growth, inflation, hoarding and compliance cost for tax payers and the price of end products.
On the GST dispute settlement authority, the committee suggested that the proposal should be omitted and the GST council be empowered to deal with differences among stake holders.
GST bill, which was introduced in Parliament in 2010, was vetted by the standing committee on finance. Following the submission of its report, the states and the Centre will finalise the draft and bring it back to Parliament.
The GST is aimed at bringing in a common tax regime for goods and services by subsuming most indirect taxes. It is also expected to increase revenue collections.
Finance minister P. Chidambaram had recently said, “The empowered committee of state finance ministers is working hard on the GST and by and large all of them are very supportive.”
GST rollout has missed several deadlines on account of differences over the contentious issue of central sales tax compensation and design of the GST structure between the states and the Centre.