GST: All States to get the benefit of additional 1% tax

The Centre has clarified that all States will be eligible to get a share of the additional one per cent tax proposed to be levied under the Goods and Services Tax (GST). The Centre aims to introduce this new indirect tax regime from April 1, 2016.

The Constitution Amendment Bill makes every State eligible to get money from the proposed additional tax, said a senior Finance Ministry official after the Empowered Committee meeting of State Finance Ministers here on Wednesday.

India Inc not happy This has put to rest the earlier impression that only manufacturing States will get the benefit, which prompted States such as Delhi to demand a share of the pie. However, corporates have opposed the provision of additional taxation over and above the GST rate. After the meeting — the first under the new Chairman of the Empowered Committee of Finance Ministers, KM Mani, Kerala’s Finance Minister — , Union Finance Minister Arun Jaitley said the Constitution Amendment Bill for GST would be taken up for discussion in the “next couple of days”.

“In view of near unanimous support from various States, we will go ahead with the Constitution Amendment in the current session of Parliament,” he said.

However, there are still some pending issues, such as changes in the language of the Bill; some States wanting compensation to be permanent; manufacturing States wanting the additional tax to be increased from the proposed 1 per cent; and levying tax on tobacco.

Tamil Nadu said that the current proposal of the Centre to introduce a Constitutional Amendment Bill and then arrive at a consensus later on various aspects of GST, especially the actual tax rates and tax bands, through the GST Council is not acceptable. But the Finance Minister remained optimistic on getting the Bill passed in the current session. The Bill will require the support of two-thirds of the members of Parliament and, thereafter, ratification by half of the States.