The Uttar Pradesh government has sought reduced powers for the Centre and more powers to states in the proposed goods and services tax (GST) council, which will recommend tax rates, exemptions lists and threshold limits among other functions. Official sources told The Indian Express that the state government wrote to finance minister Arun Jaitley last month seeking the reduction of the Centre’s powers in terms of weightage in the decision-making.
According to the proposal in the Constitution (one hundred and twenty second amendment) 2014, every decision of the council will be taken by a three-fourths majority of the weighted votes of the members present and voting as per a formula. The Bill provides the Centre a weightage of one-third of the total votes cast, while the votes of all the state governments taken together will have a weightage of two-thirds of the total votes cast in that meeting. However, the UP government has proposed that the “Centre should have a weightage of one-fourth while the states should have three-fourths weightage in the council while the decision should be taken by three-fourths majority”. This, the sources said, will give the states a slightly bigger weightage and in turn more powers to stall or clear a proposal.
To understand, as per the proposed formula in the Bill and the weightage assigned, three-fourths majority will be achieved when 18 states of the 29 states agree to the proposal. However, going by UP’s suggestion, 20 states will have to agree for securing 75 per cent majority. The proposal has not gone down well with the Centre, which is drafting a reply to UP government’s proposal.
“Their suggestion makes the entire exercise of the council a one-sided process while as per the Centre’s formula it is neutral. The centre will not accept the suggestion,” the sources added. The council will be chaired by finance minister and will have the Union minister of state in charge of revenue or finance as member, along with the finance ministers or any other minister nominated by each state.
Meanwhile, the empowered committee, scheduled to meet in Kerala on May 7-8, will take up the issues including report of sub groups on inter-state GST, GST model laws, business process, payment process, dual control and refund process. The sub-group on IGST has suggested that the centre will levy the inter-state tax and give it to the states while the extra one per cent levy will be collected by the states themselves through the common IT platform. Similarly, on the dual control, the report says that the taxable limit for both goods and services would be Rs 25 lakh while the threshold for the states would be below Rs 1.5 crore and that for the centre would be Rs 1.5 crore and above.