Centre, states break deadlock on GST

Centre, states break deadlock on GST

In a last-minute compromise deal, the Centre on Monday night decided to keep petroleum out of Goods and Services Tax (GST) in return for states agreeing to entry tax being subsumed in the new tax regime proposed from April 2016.

On the issue of compensation to states for revenue loss because of subsuming of all indirect taxes in the GST, the Finance Ministry will seek legal opinion on how it can be accommodated in the Constitution Amendment Bill that it wants to bring in the ongoing winter session of Parliament.

A compromise was reached after an over hour-long meeting between Finance Minister Arun Jaitley and Finance Ministers of seven states, including Punjab, Haryana, Gujarat, Tamil Nadu, Maharashtra, Karnataka, and Jammu and Kashmir.

Concerns of other states have already been addressed.It was agreed on Monday that petroleum goods would be kept out of the GST Bill for initial few years and a decision to include in the new tax regime would be taken later, sources said. Talks between the Centre and the states over GST framework reached a deadlock last week over entry tax and VAT .

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