Short of committing to an April 1, 2017 deadline, Finance Minister Arun Jaitley on Tuesday signalled much progress in a pan-India goods and service tax regime, thanks to an okay from all states save one, while rejecting demands for specifying the tax rate in the bill itself.After a meeting of the Empowered Group of Ministers on GST here, Jaitley said a draft model bill has also been put up in the public domain and that the panel chairman, West Bengal Finance Minister Amit Mitra, will convene a meeting again next month to suggest the GST rate."Virtually every state has supported the idea of a GST. One state, that is Tamil Nadu, said it has some reservations... But they have also said how to make it implementable," Jaitley told reporters on the margins of the crucial meeting, represented by 22 states. "They (Tamil Nadu) have offered a few suggestions, which have been noted in the committee meeting itself. So, effectively, every state either supported, or accepted, the idea of the GST," the central minister said.
He said that there were several stages involved, going forward -- an amendment of the constitution, an approval to it by the states, passage of central and model state laws by parliament, and then the states adopting their own GST laws."We'll try our best to see the constitutional amendments are approved in the monsoon session. And therefore, by the end of the year, we must have the CGST (central) and the SGST (state) laws in place," he said. "Hopefully, that should be the intention," he said, when asked if April 1 was the declared target for what is being described as the most far-reaching reforms in India's tax administration since 1947 to create one uniform, unfragmented market.
The central finance minister also alluded that the Congress party's demand for the inclusion of the proposed rate in the law itself, was rejected outright."There is complete consensus that there should be no constitutional cap on the GST rate, because contingency might arise in the future as far as the quantum of taxation fixed by the GST council is concerned. It is best to leave it to the GST council."Mitra also spoke about the "magic rate" -- the revenue-neutral rate or what is loosely called the GST rate under which the tax will be imposed. He said some suggested 17 percent and some research institutions have recommended 26.5 percent. "There is a huge difference," he said. "With regard to further clarity on how the RNR (Revenue Neutral Rate) itself will be calculated, Dr. Mitra will be convening a meeting sometime in July again. Before that, our officers will be also meeting separately," Jaitley said.
"A large part of the discussion today also centred around the idea of dual control. How this is workable, and that it shouldn't lead to any conflict or repugnancy. And therefore, it should be worked out harmoniously between the centre and the states," said Jaitley.
Mitra clarified with an example. He said if a barber shop has two overseeing authorities -- one representing the centre and the other a state, then it will nor augur well. He said there was a consensus that the centre will not interfere where the tax amount is less than Rs. 1.5 crore. The state finance minister termed the move towards the GST as a joint effort of central and state governments in a federal polity. "In the very first meeting as chairman, I am very much touched by the environment and professionalism."According to sources here, the movement forward on Tuesday and the decision to hold the meeting in Kolkata came after West Bengal Chief Minister Mamata Banerjee declared her support for GST -- which should also boost the chances of its passage in the upper house.Industry was elated, with chambers hoping for the new GST regime from April 1 next year.