Producing states still apprehensive about sales tax compensation: KM Mani

State FMs are scheduled to meet in Thiruvananthapuram on May 7 and 8 to discuss the further modalities of the goods and services tax.

Written by Surabhi | Published:May 7, 2015 2:16 am

State FMs are scheduled to meet in Thiruvananthapuram on May 7 and 8 to discuss the further modalities of the goods and services tax (GST), said Kerala finance minister and chairman of the empowered committee of the states KM Mani. In an interview with Surabhi, Mani said that states will try to meet the deadline of April 1, 2016 for rollout of the new levy. Excerpts:

How will the passage of the Constitutional Amendment Bill help in roll out of GST?

It is a very important step as it gives powers to both the Centre and the states to levy service tax and sales tax. Concurrent powers to levy GST will now come into effect. An inter-state GST will also be levied in place of central sales tax. The Centre will collect it and distribute its proceeds to states.

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Do you think meeting the April 1, 2016 target possible? Are all states on board?

That is the schedule and we will try to meet it but if required, it will have to be extended. By and large, most states have reached a consensus. But apprehensions continue amongst producing states over compensation for the Central sales tax. We will try to address it but the issue of compensation is now included in the Constitutional Amendment Bill for GST as well.

GST billUnion finance minister Arun Jaitley has said that the 27 per cent rate for the tax would be very high …

The Constitutional Amendment Bill does not mention rates for the tax. It will be decided by the Empowered Committee of States in consultation with the Centre.

What is your view on the award by the Fourteenth Finance Commission? 

It is very favourable to states. The award will help us wipe off our revenue deficit as it has provided for a post devolution revenue deficit grant. But Kerala has special problems and I hope it is taken care of by the Centre. Our main problem is the high unemployment rate, which forces most workers from the state to go abroad and look for jobs.

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