The Goods and Services Tax can be rolled out in six months if States’ revenue losses are compensated for a five-year period, Sushil Kumar Modi has said.
According to the Chairman of the Empowered Committee of State Finance Ministers on GST, revenue lost due to the new tax structure was one of the major concerns of States.
“If the Centre agrees to compensate the revenue losses incurred by States for a five-year period, then the GST can be rolled out within six months,” Modi, who is also the Deputy Chief Minister of Bihar, said at an interactive session organised by the Bharat Chamber of Commerce here on Saturday.
Missed deadlines
The rollout of GST has missed several deadlines on account of differences between the Centre and States over its design and the issue of central sales tax (CST) compensation. GST will subsume most of the indirect taxes, such as excise duty, service tax and VAT, at the central and State level .
Advocating the need for setting up an independent mechanism to look into the issue of compensation, Modi said, “The independent mechanism will decide the compensation, based on the losses incurred by each State. This will ensure transparency and fairness in the process.”
Political uncertainty
According to Modi, the Parliamentary Standing Committee on Finance is expected to submit its report on the GST Bill in a few weeks. However, the Bill will need a Constitutional amendment which requires a two-thirds majority. But the UPA, in the current scenario, might find it difficult to get such a majority, he hinted.
“We have already arrived at a consensus for nearly 80 per cent of the issues. However, given the kind of stalemate in Parliament and the political uncertainty, it is difficult to predict a timeline for the implementation,” he said.
Citing instances of delay in the implementation of CENVAT and VAT, he said, it took the Government about 15 years and 10 years, respectively, to implement these taxes. “GST will come, but whether it will be brought in by this Government or the next is something which will have to be seen,” he said.