Expressing its opposition to the GST Constitution Amendment Bill, Tamil Nadu today said the Centres proposal for resolving issues concerning new indirect tax regime through a GST Council was not acceptable to it.
"Current proposal of the Government of India to introduce a Constitutional Amendment Bill on GST and then to evolve a consensus on various aspects of GST, especially the actual tax rates and tax bands, etc., through the GST Council is not acceptable to us.
"Broad consensus on the critical issues should be evolved through the Empowered Committee before the enactment of the Bill is taken up," said M C Sampath, Minister for Commercial Taxes and Registration, Tamil Nadu.
He made these comments while speaking at the meeting of the empowered committee of State Finance Ministers which among others was attended by Union Finance Minister Arun Jaitley.
Tamil Nadu, he said, was opposed to the idea of according constitutional status to the GST Council as it would impact the autonomy of states in fiscal matters.
The Centre would enjoy effective veto in the GST Council, while all the States would have equal weightage in the new body, he added.
Sampath further said that petrol and petroleum products should be kept outside the purview of the GST in order to protect the fiscal capacity of the states.
Also, he added, that an enabling provision should be made in the GST legislation to allow states to levy higher taxes on tobacco and tobacco products, similar to what has been permitted to the Centre.
The Centre, it may be mentioned, is keen to eventually include all items within the purview of the GST and is working for its roll out by April 1, 2016.
"Taking into account the permanent losses that would accrue to the State, 100 per cent compensation should be provided to the States for the entire period of 5 years," he said.
Sampath made a case for evolving a consensus on the methodology and the period of compensation and said "it should be included in the Constitutional Amendment Bill itself".
Manufacturing states like Tamil Nadu will lose revenue on implementation of the GST, he said, and demanded that "the States should be permitted to retain 4 per cent of the CGST (Central GST) portion of IGST (Integrated GST) on all inter-State sales/transfer of both goods and services."
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