Government to fully compensate States for central sales tax loss

NEW DELHI - The Chairman of Empowered Committee of State Finance Ministers, Asim Dasgupta, has said the government has agreed to fully compensate states for the losses that they have suffered due to a reduction in central sales tax (CST), estimated at Rs 14,000 crore in 2010-11.

State finance ministers met Union Finance Minister Pranab Mukherjee here to discuss the GST rollout.

“There are two major issues which we had discussed among ourselves in the empowered committee meeting today. We discussed these issues with the union Finance Minister as well,” Dasgupta told reporters after meeting.

“Firstly we discussed on the latest draft of the constitutional amendment for GST. Second one is the CST rate reduction related loss compensation for the states,” he added.

The consensus for a Constitution Amendment Bill among states could not be reached even after Finance Minister Pranab Mukherjee agreed to fully compensate states’ losses suffered due to a reduction in the rate of the central sales tax (CST).

The Central Government wants to introduce the GST Amendment Bill in the upcoming Budget session of Parliament. Several states, mostly National Democratic Alliance-ruled states of Bihar, Madhya Pradesh and Gujarat, are opposed to draft proposals apprehending their autonomy would be compromised.

The government had originally planned to roll out GST from April 1 last year but a consensus could not be built on introduction of the constitutional amendment Bill which is required to be passed by two-third majority in both the houses of Parliament.

The proposed GST, which will change India’s fiscal landscape, however, has faced several roadblocks as states apprehended that their autonomy would be compromised. (ANI)