GST update

Jammu and Kashmir finance minister Abdul Rahim Rather is the new chairman of the empowered committee of state finance ministers on goods and service tax (GST).
The National Conference leader’s election as the chairman of the panel assumes significance in more ways than one as this is a departure from earlier practice of having finance minister from an Opposition ruled states to head the group. Punjab or Gujarat finance ministers were earlier considered as possible candidates for chairmanship of the empowered group.
His election to the coveted post was unanimous even as Delhi chief minister and senior Congress leader Shiela Dixit proposed Rather’s candidature.
Rather has come after the deputy chief minister and finance minister of Bihar, Susheel Kumar Modi, resigned. Modi quit after ruling JD-U and BJP parted ways in Bihar and from the National Democratic Alliance (NDA).
Monday’s election of Rather was done in the presence of finance minister P Chidambaram, minister of state for finance JD Seelam and other senior finance ministry officials.
Rather’s task is formidable in forging consensus amongst fractious states and centre on the crucial Constitutional Amendment Bill as a precursor to roll out of unified levy, Goods and Services Tax (GST) that subsumes customs, excise and services taxes.
But, the new chairman is confident there would be positive movement on GST rollout. “We can’t move ahead without the Constitution Amendment Bill. If there is a delay in GST’s implementation, it will be because the bill doesn’t get passed in Parliament,” Rather told reporters.
“After this, the work on the state and central GST law will start. Whatever decision will be taken, it will be on the basis of a consensus” Rather added.
Parliamentary standing committee on finance headed by former finance minister Yashwant Sinha had earlier made its recommendations on GST related constitutional amendment bill.
This bill was first introduced in Parliament in 2010.
Speaking to reporters immediately after Rather’s election, Chidambaram hinted at two options before the government. Once the law ministry vets the recommendations of Parliamentary panel, the government might introduce a fresh constitutional amendment bill or move amendments to the bill already under consideration in Parliament.
The bill, when passed and gets enacted, will empower both states and centre to levy the GST. Even Union territories with a legislature can levy GST on goods, services or both.
But, Chidambaram said, “Let the draft (constitutional amendment bill) be first approved, then the Parliamentary law must be approved. At least, we are moving forward.” As of now, GST can only be implemented either in 2014-15 or the next financial year given the lengthy process of getting it past the
state legislatures. The original deadline for introducing GST was 2010. Since then, the government has missed several deadlines to rollout the levy that would unify India into one single market.
Apart from the 14 per cent mean rate, centre has also agreed to fully compensate states in case the latter incurs revenue losses following introduction of GST. Structural issues on design of GST, phase out of CST and arrears have blocked the unified levy rollout.
Centre and the states have reportedly also made some progress on this front during the past few months.

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