GST continues to be plagued by hurdles

Many states irked by losses after switching to new system

Hurdles in bringing Goods and Services Tax (GST) seem far from over with chairman of  GST panel K M Mani on Monday saying many states are demanding full compensation for five years on account of losses incurred by them for switching to the new tax system.

They also demanded abolition of 1 per cent additional tax on inter-state sale of goods.
Mani will present the states’ proposal before the Parliamentary committee on Tuesday.

"Tomorrow (Tuesday), I am going to present the proposal before the Parliamentary committee... Most of the states are in agreement with GST. Some states are asking for compensation, some want review of additional tax. Those things need to be decided," Mani told reporters after meeting Finance Minister Arun Jaitley during the day.

The Centre has agreed to compensate states fully in the first three years and partially in fourth and fifth year as against their demand for full compensation for five years.

Besides, some states have also been favouring abolition of entry tax. Some have demanded that purchase tax should not merged in GST, and if it is merged, 15 years compensation is awarded.

In the Budget 2015-16, Jaitley had promised that GST would be rolled out from April 1, 2016. The GST Bill after being passed by the Lok Sahba has been sent to the select panel of the Rajya Sabha after the Opposition objected to the changes the government brought into the previous Bill and is likely to be taken up again in the forthcoming Monsoon session.