The two-day session of the Empowered Committee of State Finance Ministers on Goods and Services Tax (GST) concluded at Kovalam on Friday.
Finance Ministers from 15 States participated in the meeting. State Secretaries and Commissioners of Commercial Taxes from all the States also attended it.
The meeting decided to fill the two director posts on the board of the GST Network Company, which is implementing the required IT platform for the rollout of GST.
WR Reddy, Principal Secretary (Taxes), Kerala, and Vaibhav Galriya, Commissioner of Commercial Taxes, Rajasthan, have been nominated as two new directors of the company.
States’ fears Earlier, addressing the participants, Chief Minister Oommen Chandy alluded to the fears voiced by States about the likely impact from GST rollout on them.
The challenge of the Empowered Committee is to ensure that the States do not experience revenue loss in the post-GST scenario.
Such a revenue loss is unthinkable in the context of the acute fiscal stress afflicting most States, the Chief Minister said. The Centre has promised to compensate losses, if any, for the first five years.
Complex system The complex and cumbersome tax system in India is a major hurdle for stakeholders. Reforming the tax system was one of the items in the economic reform agenda of the 1990s.
As part of this, a committee under the chairmanship of Raja J Chelliah was appointed to suggest ways for a complete overhaul of the system.
Based on its recommendations, several reforms were introduced in direct taxes. Introduction of value-added tax in 2005 was the first step in that direction.
The principal recommendation of the committee on indirect taxes was the switch-over to GST. It was found necessary to bring services under the tax net, given its increasing contribution to the GDP.
GST will help reduce the tax burden on goods and in turn enhance competitiveness of the country in the global market, the Chief Minister said.