One
of the concerns of the state governments is post-GST,
area-based exemption — where companies need not pay
indirect taxes — will not be extended. States fear
that firms would relocate their manufacturing base
once tax incentive is gone and thus lead to decline in
revenue collections.
Meanwhile,
differences between the BJP- and Congress-ruled states
have emerged on when to start implementing GST, a
unified indirect tax that will replace many state and
central level duties. Initial plan was to roll out GST
from April 1, 2010.
“There
should be compensation for states that lose out
because of GST implementation. There is a proposal of
providing it for five years. But we want it to
continue without any timeframe,” Assam Chief
Minister Tarun Gogoi told the media, at the sidelines
of the pre-Budget meeting between states and the
finance ministry. Gogoi is in charge of
finance-related matters of Assam government.
An
empowered committee of state finance ministers headed
by West Bengal Finance Minister Asim Dasgupta is
evolving a consensus on implementing GST.
When
value-added tax (VAT) was introduced from April 2005,
the Centre had agreed to compensate any revenue loss
100 per cent in the first year, 75 per cent in the
second year and 50 per cent in the third year. As the
VAT revenue showed good growth, the Centre received
claims of only Rs 13,167 crore till January 31, 2008,
the last date for which data is available.
States
ruled by BJP are having a differing view on
implementation of GST. “The Information technology
infrastructure for GST is not ready. Even the road map
is not in place. How can we implement GST from April
1, 2010,” said Amar Aggarwal, minister for trade
taxes, Chhattisgarh government.
We
want implementation of GST. But the date will be fixed
after consultation with the Centre,” said Himachal
Pradesh Chief Minister Prem K Dhumal. Aggarwal and
Dhumal belong to BJP-ruled states.
However,
Congress-ruled states are in favour of implementing
GST from April 2010. “There was lot of similar
doubts and problems about VAT, which now is running
successfully. I don’t think, there would be any
problem in implementing GST from April 1, 2010,”
said Goa Chief Minister Digambar Kamat.
Finance
Minister Pranab Mukherjee told the state government
representatives that implementation of GST was
important for the economy. “This is a critical part
of our economic reforms. I request all the chief
ministers and finance ministers to resolve the pending
issues expeditiously.”
The
empowered committee has decided to meet once every
month, to make up for the time lost due to the general
elections. “We do not have much time and will work
intensively to sort out problems with states,”
Dasgupta said.
