While remaining committed to a timely roll-out of the goods and services tax, states on Tuesday indicated that there are a number of issues that have to be addressed before the indirect tax reform can be introduced from April 1, 2017.
“We are working towards it. But it is the Parliament that has to pass the GST laws,” said Amit Mitra, West Bengal Finance Minister and Chairman of the Empowered Committee of State Finance Ministers on Tuesday.
This was the first meeting of state Finance Ministers after the Constitution Amendment Bill for GST was passed by Parliament earlier this month.
Sources also indicated that states are unwilling to have a GST rate of less than 18 per cent. “It will be between 18 per cent and 22 per cent, with a band of 1 per cent,” said a state Finance Minister, adding that industry associations also did not object to a 5 per cent tax on gold and jewellery.
The Empowered Committee also met trade and industry associations to get their feedback on the design and structure of GST and sought an assurance that the tax benefit would be passed on to the consumers. “We have seen it in the introduction of the value-added tax and it is likely now too that the companies will not pass through lower taxes to consumers,” said another state FM.
Industry associations were keen on a low tax rate under GST.
The Confederation of Indian Industries called for a standard rate of 18 per cent to ensure that the tax revenues of the Centre and States would not be adversely impacted by the introduction of GST. “The Centre has also assured the states of full compensation for five years,” it said.
Meanwhile, FICCI said the merit rate under GST should be lower and the standard rate should be reasonable. “Goods fully exempted from the levy of excise duty and VAT by all the states should be categorised as exempted goods in the GST regime,” it said.
Nasscom in its representation said the sector is creating huge job opportunities and allowing small industries to sell their products. Stating that e-commerce facilitates competition, it said in the sector, one cannot avoid being in the tax bracket.