From Our Bureau
NEW DELHI: The 47th meeting of the Goods and Services Tax (GST) council will be held on June 28 and 29, Finance Minister Nirmala Sitharaman announced on Thursday.
Earlier, the meeting was scheduled for April but due to her other commitments, the meeting had to be postponed to next month. The council comprises the finance ministes of states, headed by Sitharaman.
Compensation issue is likely to be taken up in this meeting as many non-BJP states are pressing for extension of the GST compensation mechanism of the Centre providing assistance to the states for five years for the losses from the GST tax is ending the next month. The Centre has paid GST compensation until end-May to the states with only the June payment pending. It cost $103 billion to the Centre.
Finance ministers from the opposition-led Kerala, West Bengal and Chhattisgarh have said they will raise the compensation issue at the meeting and it will be also supported by Tamil Nadu and Bihar, a state government by PM Modi’s ally.
States are emboldened to take on the federal administration after the Supreme Court ruled last month that the GST Council’s decisions are non-binding. If Sitharaman shoots down the demand, the states may unilaterally raise revenue with other taxes, making a mockery of a single nationwide tax envisaged under GST.
“This is not an ego tussle between the center and states,” said T.S. Singh Deo, finance chief in the mineral-rich Chhattisgarh state.. “The idea is to ensure increase in revenue and if it doesn’t happen through the council then it will have to be from other avenues. This was supposed to be ‘one nation one tax’ and not ‘one nation one budget.’”
Deo said states may explore imposing a cess on certain goods to raise revenue if the federal government doesn’t agree to extending compensation payouts.
The opposition-run states accuse Modi’s government of concentrating power at the center while he wants them to follow “co-operative federalism.” The court ruling on GST goes some way in changing this situation.
Kerala finance minister K N Balagopal has gone on record that “GST had curtailed the power of states and now this order will give some freedom to states.”
Union Revenue Secretary Tarun Bajaj has said the GST Council has helped improve the ease of doing business and that all decisions so far, save for one on taxing lotteries, was made by consensus and he hopes some solution to the ticklish compensation issue will also be found out without disrupting the GST mechanism.
