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GST talks take a positive turn

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By OUR SPECIAL CORRESPONDENT
  • Published 24.08.10
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New Delhi, Aug. 23: The finance ministry is optimistic about meeting the April 1 deadline for implementing the goods and services tax (GST) as discussions with states are moving in a positive direction.

According to ministry officials, a consensus is expected soon.

GST is a value-added tax imposed at the point of consumption, which seeks to replace most indirect levies such as excise duty, entertainment tax and luxury tax and where proceeds will be shared by the Centre and the states.

Last week, the BJP-ruled states and a few others had opposed a revised draft of the constitutional amendment bill on GST and sought another month to go through the fine print. Some had raised fears about losing their autonomy, though these were seen as delaying tactics.

Earlier, a large number of states, including some ruled by the Congress, had objected to the Centre’s move to give the Union finance minister veto powers. Finance minister Pranab Mukherjee, however, had withdrawn the contentious provision.

While agreeing to give more time, Mukherjee had emphasised in his meeting with the state GST panel that the introduction of the bill in the monsoon session of Parliament and discussions between the Centre and states could be carried on simultaneously.

“The priority is the finalisation of the draft constitutional amendment so that the bill may be introduced in Parliament during the ongoing monsoon session. It must be appreciated that the constitutional amendment is only an enabling provision. It does not prohibit us from continuing our dialogue on rates,” he had said.

Among all BJP-ruled states, only two — Uttarakhand and Madhya Pradesh — had initial reservations about the bill. Mayawati’s BSP government in Uttar Pradesh had also objected to various provisions of GST.

BJP-ruled states have protested the revised draft on the ground that it does not clarify how the changes will be brought about. The draft proposes that any decision on GST can be taken only when there is a complete consensus between the Centre and the states.