Tamil Nadu urges Centre to strive for 'broad consensus' on GST

The Tamil Nadu government has urged that the Centre should strive for a broad consensus on many aspects related to Goods and Services Tax.
Tamil Nadu urges Centre to strive for 'broad consensus' on GST
The Tamil Nadu government has urged that the Centre should strive for a broad consensus on many aspects related to Goods and Services Tax (GST) and address states' concerns on permanent revenue loss in this regard, as per a PTI report.
 
This was stated in a letter to Union Finance Minister Arun Jaitley by Chief Minister J Jayalalithaa, who also wrote to her state counterparts in a bid to mobilise support on GST issues raised by her.
 
Pointing out to a revised draft Constitution Amendment Bill circulated on June 20, 2014, Jayalalithaa said that provisions relating to Declared Goods had been removed and alcoholic liquor for human consumption kept outside the GST.
 
"It has been brought to my notice that during the recent meeting of the Empowered Committee of State Finance Ministers held on August 20, 2014, consensus was reached amongst states on some more issues.
 
"(This is) including that the threshold limit for levy of GST on goods and services should be fixed at Rs 10 lakh; the threshold limit for compounding scheme should be fixed at Rs 50 lakh with a floor rate of tax at 1 per cent; and that the Exemption list under GST should be common for both CGST and SGST. I do hope that the Government of India would accede to all these points," she said in a letter.
 
States should be allowed to grant exemption on all goods of local importance without any restrictions, she said, adding they should be vested with control of dealers having a turnover up to Rs 1.5 crore both for intra-state and inter-state supply of goods and services, whereby the 'Centre can avoid expanding its administrative machinery while collecting CGST (Central GST) from such dealers.'
 
She disagreed with Government's proposal to bring petroleum products under GST, saying it would 'diminish' the limited revenue resource of the states.
 
Further, the dual levy system of states' tax on petroleum products in addition to GST was not acceptable, she said.
 
She said there was no certainty that the revenue gain on account of levy of tax on services and on import of goods in this period would be substantial enough to offset revenue loss on account of bringing petroleum products under GST ambit.
 
She said aspects like threshold limit for levy of GST, goods and services which are to be exempted, rates including floor rates with bands and taxes to be subsumed under GST, were some of the crucial factors for determining the Revenue Neutral Rate (RNR).
 
She noted that the 'Place of Supply of Service Rules' which are to be framed would also play a vital role in estimating tax revenue from services to the States.
 
With Tamil Nadu being a manufacturing state, it stands to permanently lose substantial revenue if GST is implemented, 'due to the sudden shift of levy from the point of origin to the point of destination,' she said.
 
The Chief Minister called for an independent compensation mechanism and methodology for revenue losses suffered by the states for implementation of GST.
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