Plans to roll out GST Bill may hit a roadblock

The Modi government’s plans to roll out GST regime from the next financial year could hit a roadblock with the Congress objecting to certain provisions of the draft legislation presented to Parliament.

Former prime minister Manmohan Singh claimed the Goods and Services Tax Bill had several shortcomings and the state governments may stand to lose revenues if the legislation was passed by Parliament in its present form.

“I am not sure that the legislation we are presently considering is the best route forward. It helps neither the Centre nor the states, a majority of them,” Singh said, addressing a day-long meeting of chief ministers of Congress-ruled states.

However, the Congress said it was not opposed to the concept of GST, which was introduced by the UPA government in 2011. A resolution adopted at the meeting of the chief ministers said the shortcomings in the Bill “need to be addressed before it finally becomes a law.”

Karnataka Chief Minister Siddaramaiah said the GST Bill has provision to merge the entry tax with the GST and adoption of this clause would lead to a loss to the state revenues.

“The Centre should make good the loss incurred by the state government or allow it to raise the tax over and above the GST,” he told reporters voicing his concerns over the GST Bill.

Singh said if a revenue neutral GST rate was in excess of those prevailing elsewhere then it would not be possible to derive adequate benefit from GST. “There is also merit in the demand of the states for a full 100 per cent compensation for revenue losses in the first five years unlike the provision in the present bill of 100 per cent compensation in the first three years, 75 per cent in the fourth year and 50 per cent in the fifth year,” Singh said.

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