Centre to address concern over GST veto power

Finance Ministry working on redrafting Constitution Amendment Bill

 “We are working on redrafting of the Constitution Amendment Bill on GST. The Finance Minister is likely to approve it soon,” a key Finance Ministry official said.

He further said that the concerns of the states over the Finance Minister’s veto power will be addressed. The proposed rollout of the Goods and Services Tax (GST) from the next fiscal received a setback after states, on Wednesday, rejected the draft Constitution Amendment Bill in its present form, as it seeks to provide veto powers to the Centre over indirect taxation matters pertaining to the states.

“This proposed draft Constitution Amendment Bill related to GST in its present form is not acceptable to the states... States in general have reservations about the Union Finance Minister having any veto power on state GST,” Empowered Committee of State Finance Ministers Chairman Asim Dasgupta had said. Dasgupta had said, the states are against infringement of their financial autonomy and have certain reservations on the draft bill’s provisions for the GST Council and the GST Disputes Authority. The states also feel the GST Disputes Authority should not find a place in the Constitution Amendment Bill and may be incorporated in GST legislations.

“So, how to handle a situation where state GST and central GST would be there will have to be appropriately and acceptably handled,” he said.

The rejection had come within hours of Union Finance Minister Pranab Mukherjee’s appealing in Parliament to opposition parties and the states for their cooperation in implementing GST from the next fiscal, saying this indirect taxes reform measure will help arrest fluctuation in the general price line.

The very next day, Mukherjee allayed the fears of states, saying he doesn’t intend to be a “Super Finance Minister”.

GST has already missed the earlier deadline for a rollout this fiscal after states and the Centre differed on the structure of the proposed indirect tax system which is expected to replace excise duty, service tax on the Centre’s front and VAT at the states’ end, besides local levies, cesses and surcharges. The new deadline for rolling out GST is now proposed to be April 1, 2011.

A Constitution Amendment Bill is required to provide the Centre the right to impose a levy beyond the production stage and entrusts states with the power to levy service tax.

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