GST a non-starter as states reiterate their opposition
21 Sep 2010
The union government's ambitious plan to introduce a general goods and services tax (GST) to replace the plethora of indirect taxes imposed by various state governments seems unlikely to take off in the foreseeable future, as the states – particularly the ones ruled by non-Congress parties – remain firmly opposed to the move.
Monday's meeting of the empowered committee of state finance ministers in this regard remained inconclusive. In fact, the Bharatiya Janata Party-ruled states did not even give their response to the final draft of the GST amendment bill that came up for the states' approval.
The GST, which seeks to replace taxes such as central excise duty and services tax and state taxes including value-added tax, entry tax and purchase tax, with a single levy, has already been delayed by a year.
The Constitution has to be amended to allow Parliament and state assemblies to tax the same items. At present, the centre can impose tax on goods at the factory gate and on services, while states can only tax goods at retail level. States do not have the power to levy a tax on services.
The constitutional amendment has to be supported by two-thirds of members present at the time of voting in Parliament and ratified by 15 state assemblies. Thus, it is important for the United Progressive Alliance government to muster the much-needed political support for this crucial tax reform. But currently this does not seem to be happening.
Asim Dasgupta, chairman of the empowered committee and finance minister of Left-ruled West Bengal, tried to strike a positive note. ''A good number of states have agreed to the revised draft proposal of the centre ... a few states disagreed with this amendment bill as it stands now,'' he said.
