Saturday, Oct 25, 2014

Centre nixes GST panel’s China, Russia ‘study’ trip

Written by Shruti Srivastava | New Delhi | Posted: August 5, 2014 1:45 am

The Centre has turned down the request of the Empowered Committee of state finance ministers to go on a study tour to China and Russia later this month for understanding the indirect tax models of the two countries.

Official sources told The Indian Express that “The Empowered Committee was informed last week that there is nothing that China and Russia have to offer in terms of model for India’s proposed Goods and Services Tax (GST). So there is no case for the trip to these countries”.

On July 17, this newspaper had reported that the state finance ministers were planning their seventh visit abroad — to China and Russia — ever since the idea of the new tax regime was first floated in 2008.

The visit was slated between August 19 and September 4 to study the finer aspects of the indirect tax models of these countries despite the fact that even after innumerable consultations and extensive travelling, the states are yet to reach a common ground on several aspects of the new indirect tax regime.

This is the first time that the Centre has turned down a request made by the Empowered Committee for such foreign travels to study the GST model of different countries, the source said adding that while China had informed the Empowered Committee of its inability to facilitate their visit during the said period due to “some internal pressing issues”, Russia’s indirect tax system is “way too complicated for India to follow”, thereby making no case of studying it.

Even though the states finance ministers have visited Canada, Japan, South Africa, London, Rome, Brazil, Paris, Madrid, Brussels and Luxembourg, they are still far from reaching consensus on issues like inclusion of petroleum, alcohol, natural gas, purchase tax and entry tax in the ambit of GST.

Also, an agreement on the design of the GST has also remained elusive.

Although finance minister Arun Jaitley has expressed confidence in getting the Constitution Amendment Bill for introducing GST passed by the end of financial year 2015, several states fear that the GST will take away the fiscal autonomy they enjoy, making it difficult for the minister to cobble up support for the Bill, which needs two-thirds majority in both the Houses of Parliament and ratification by at least 50 per cent states.

The finance ministry is working on introducing the Bill in the Winter session of Parliament.

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