Pranab goes the extra mile to build consensus on GST

Centre may accommodate concerns on GST raised by states in the final draft Amendment Bill.

Having decided to present the constitutional Amendment Bill for the proposed Goods and Services Tax (GST) in the Budget session,the finance ministry is working on the final draft Amendment Bill the fourth since the discussions on the new tax regime started and will soon send it to other ministries for their comments.

Sources told The Indian Express that the Centre is contemplating accommodating the concerns raised by the Empowered Committee of State Finance Ministers in the meeting held on February 11. The fourth draft,a hybrid of the second and third draft,being prepared by the finance ministry has proposed that while the proposed GST council would be formed with presidential order,decisions of the council would be taken through consensus. The proposed council will have the Union finance minister as the head and a state representative as the vice-chairperson,the sources added.

Also,the GST Dispute Resolution Authority is proposed to be a part of the constitutional amendments,the sources added.

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Finance minister Pranab Mukherjee has in his Budget 2011-12 said that the Centre will introduce the GST Constitutional Amendment Bill,the most vital step for implementing GST, in the ongoing Parliament session. In fact,he went on to say that the Centre is willing to go extra mile for building a consensus on the same.

I am ready to go extra mile to arrive at a consensus on GST but they (Opposition) will have to travel with me, he had said.

He also asked the industry to reach out to the Opposition for generating consensus on the pending reform legislations.

The BJP-ruled states like Madhya Pradesh and Gujarat along with others like Uttar Pradesh have been opposing the amendments arguing that it will take away the fiscal autonomy of states.

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The final draft Amendment Bill has also kept petroleum,natural gas,diesel and ATF out of the GST ambit.

The states had rejected the first three drafts proposed by the Centre,calling it undemocratic and a plot to take away their fiscal autonomy.

In the first draft,the Centre had suggested setting up a GST council with the union finance minister as its head. The finance minister was given veto power in the GST Council and his decisions were to be binding on both the Central and state governments.

This was out-rightly rejected by the states on the grounds that it would tantamount to taking away their fiscal autonomy. In the second draft,the government proposed that the decisions by the council would be taken by consensus of both states and the centre. However,the second draft was also rejected.

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The third draft proposed the creation of a GST Council through an Act of Parliament,instead of presidential order. The Centre could not garner enough support for the third draft too. In the final fourth draft,the Centre is planning to accommodate most of the concerns of several states. For instance,the Centre is planning to give in to demands of north-eastern states of allowing autonomous district councils to levy taxes.

The finance ministry will send a Cabinet note by next week seeking comments of other departments after which it will be introduced in Parliament.