Maharashtra became the tenth state assembly to adopt a resolution ratifying the amendments to the Constitution to enable the rollout of the Goods and Services Tax regime from April 1 next year. The Centre requires at least 16 state assemblies to adopt the resolution to ensure implementation for the new taxation regime.
Prime Minister Narendra Modi has set a September-end deadline for all states to complete the procedure.
Till Monday, nine state assemblies — Assam, Bihar, Jharkhand, Himachal Pradesh, Chhattisgarh, Gujarat, Madhya Pradesh, Delhi and Nagaland — had adopted the resolution. Maharashtra, the biggest BJP-ruled state, became the tenth when both Houses of the state legislature passed the resolution during a special one-day session convened Monday.
With the Congress and the Nationalist Congress Party in the Opposition supporting GST, all eyes were on BJP’s ally Shiv Sena, which had been raising apprehensions regarding the new regime even as it voted for the reform in Parliament.
However, though the Shiv Sena cited fears over how the regime could impact the functional autonomy of municipalities and even usher in price rise during the initial years, it voted in favour of the resolution after securing a “concrete assurance” from Chief Minister Devendra Fadnavis regarding the riders.
The party’s main concern is that octroi, the biggest source of revenue for the Shiv Sena-controlled Mumbai municipality, will be subsumed in GST resulting in an annual shortfall of Rs 7000 crore.
Just as the Centre has already assured 100 per cent compensation to all manufacturing states for revenue losses suffered in the first five years, Shiv Sena’s Legislative Council member Neelam Gorhe, while spelling out her party’s stance in the Upper House, demanded that the CM and Finance Minister Sudhir Mungantiwar provide a “concrete assurance” that the compensation for the losses suffered by the Mumbai municipality and other local bodies won’t devolve to the state corpus but directly to the municipality.
“While we can have a detailed debate when the legislation regarding the tax rate and implementation of the regime is tabled later in the state legislature, we (the Shiv Sena) demand a firm assurance today that a mechanism for direct transfer of funds to the BMC would be devised,” she said.
Fadnavis later committed that a law would be enacted at the state level to ensure the funds are directly devolved to the civic coffers.
Gorhe also sought formulation of a state legislative committee for deliberation on the tax rate and the impact of the new regime.
The Shiv Sena has demanded that the BMC must be compensated with an annual accreditation of 10 per cent, while backing the reform on grounds that it promises to simplify the taxation regime. As anticipated, the Congress and the NCP backed the resolution in both Houses, ensuring a safe passage.
In the Legislative Assembly, Mungantiwar assured the House that the state would not lose a single rupee and would retain its financial autonomy after the shift to the GST regime. He added that Maharashtra, “a favoured investment destination and engine of growth”, would further prosper and achieve new high in its growth.
Mungantiwar said the state’s finance managers were in consultation with experts over the impact GST’s roll out would have on the state coffers in the initial years.
“The state will seek a compensation factoring in the highest growth rate over the last five years,” he added.