The Telegraph
Saturday , July 5 , 2014
CIMA Gallary

Aid before tax system switch

Agartala, July 4: The Tripura government has demanded a five-year compensatory package for switching over from the present value-added tax (VAT) system to goods and services tax proposed to be introduced by the Centre.

The goods and services tax is in vogue in many countries of Europe and it leads to simplification of the tax regime.

The state government is, however, concerned over the likely shortfall in tax collection at the initial stage.

Official sources in the finance department here said in the meeting of the empowered committee in New Delhi yesterday, many finance ministers of states pressed for compensatory package from the Centre for at least five years.

“Tripura finance minister Bhanulal Saha pointed out the problems faced by the states at the time of replacement of sales tax by VAT and the resultant shortfall in revenue,” B.K. Sur, a deputy secretary in the finance department, said.

In the meeting, Saha said when VAT had been implemented the states were promised a consolidated package of Rs 32,000 crore from the Centre but ultimately only Rs 9,000 crore had been actually disbursed.

“Our finance minister demanded an amendment of the Constitution to give goods and services tax a constitutional and statutory status,” said Sur.

However, the representatives of the Union finance ministry said it was already decided in consultation with the 14th Finance Commission that compensatory package to states would be given for four years.

Tripura finance minister said the system of voting in the goods and services tax council with 75 per cent vote to the Centre and 25 per cent to the states should be revised to give 75 per cent voting to the representatives of states.

“Our minister wanted all the contentions points regarding goods and services tax to be settled before its introduction. However, the central representatives wanted the goods and services tax system to be implemented as early as possible after settlement of differences between the Centre and the states.