Now, statute change shadow on GST  

The government is grappling with a slew of thorny issues in designing the structure of the proposed goods and services tax (GST). In a recent review meeting on GST between revenue secretary Sunil Mitra and secretary of empowered committee of state finance ministers Satish Chandra, the main points of discussion were the constitutional amendments, flexibility for states to change rate of tax when they want, threshold limit for GST and whether to have single or dual rate.

According to official sources, the constitutional issue seemed to be the hard nut to crack. ‘‘There is some suggestion from the states to make a system that goes by a majority rule. The majority could be anything between 50% and 75%. The issue being faced is that even if one state does not vote for the action or decides not to follow anything decided by the others, there is nothing that can be done about it,’’ a finance ministry official told FE.

In fact, there is an issue with the essence of Indian Constitution, the rule that would be made at this point in time would be applicable for the government of the day (the executive) and not for the Legislative, he said, adding that in case the government changes the rules would not be applicable for the changed government.

Finance minister Pranab Mukherjee has promised to bring GST by 2011 but looking at the number of issues that are currently haunting the ministry, the target looks a little difficult to achieve.

The GST discussions that had taken a backseat because of the finance budget that was the priority, have again gained steam with the briefing that happened on Monday. The next meeting is expected to take place next week.

Source: Financial Express, India, dated 13/04/2010