Union Finance Minister Arun Jaitley has given the nod to consider Maharashtra government’s three demands to tide over its finances after enforcement of goods and services tax (GST).
The state government believes the higher rate base of 26-28 per cent would be more beneficial for the state compared to 18 per cent the Congress has been emphasizing on.
Chief Minister Devendra Fadnavis had placed three demands with the Centre. Maharashtra had proposed to the Centre to levy one per cent additional tax along with GST to offset revenue losses in the state driven by the manufacturing sector. The state government had suggested the finance ministry that the additional one per cent levy should be for all the manufacturing-driven states like Maharashtra and Tamil Nadu among others.
The other demand relates to compensation for losses incurred due to abolition of local bodies taxes and octroi collections amongst 25 municipal corporations.
While state government has exempted Mumbai from LBT, it believes, the total emolument across other civic bodies where LBT has been abolished works out to Rs 14,000 crore to 16,000 crore.
The third demand relates to providing financial support after enforcement of GST for ten consecutive years. However, the Centre has said instead of ten years it would provide the assurance for five years which would be uniform for all states across the country.
According to state Finance Minister Sudhir Mungantiwar, “All the three demands of the state government have been positively considered by the Centre.”
However, the finance department is still working on details to ascertain the exact revenue loss it would have to cope with, once GST is enforced. It is also initiating measures to work out ways to offset part revenue losses.
The state which is reeling under huge debt of Rs 3.5 lakh crore coupled with growing demand to raise funds for its agriculture and infrastructure sectors wants to seek maximum benefits from GST. While Fadnavis has welcomed the uniform tax regime across the country, the Centre and states are working to meet the financial challenges especially in Maharashtra.