Gujarat proposes new GST model     

Gujarat has proposed in a presentation on January 8 to the empowered committee of state finance ministers that GST be collected by the states. The proposal says that in case of a gain, the state government would then share the proceeds with the Centre in a 5:7 ratio, meaning 5% for the Centre and 7% for the state and in case of a loss it can be treated as a central GST loss.

So, if the projected revenue is Rs 100 crore and the actual revenue is Rs 80 crore, the loss of Rs 20 crore can be treated as a central GST loss. If it is Rs 120 crore, which is a gain of Rs 20 crore, it can be distributed in the 5:7 ratio. Gujarat’s new model suggests that it will reduce cost of compliance and help the lack of consensus.

The delay in implementation of GST is because there is no consensus over rates. Over the dual structure among the empowered committee of state finance ministers, the first discussion paper suggested that there be a dual structure i.e. a state GST and a central GST. The constitutional amendment that the law ministry and the finance ministry have been working on for over three months is also discussing on how the legal framework should be implemented.

Source: Moneycontrol.com, India, dated 11/01/2010