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States demand double
compensation for GST regime
States want the Union government
to double the compensation proposed by the Finance Commission to implement the
goods and services tax (GST) regime.
The Empowered Committee of State
Finance Ministers is set to demand a compensation of Rs 1-lakh crore to adopt
the GST, which is seen as the biggest-ever tax reform. States fear that the
introduction of the GST may lead to a fall in revenues for them.
The Committee will take up the
issue with the Finance Minister, Mr Pranab Mukherjee, in early next month, one
of the members of the Committee revealed.
The Centre has been holding talks
with the states to implement the GST as it attempts to do away with the
anomalies prevailing in the current structure where goods and various services
are taxed more than once by state and Central government agencies.
To avoid the
"tax-on-tax", states are seeking more funds from the Central
government as the implementation may lead to lower tax revenues for them. The
tax, which was supposed to take effect from April 2010, has been delayed by a
year due to the disagreement.
The Central government had
accepted the 13th Finance Commission recommendations on revenue sharing with
states, which the states said "ignored" their demands.
It suggested paying of Rs 50,000
crore to the states to agree for GST. The implementation of the tax regime
requires cooperation from states as it involves amending the laws.
The Committee will also ask the
Finance Minister to change the amortisation schedule of the compensation.
The next meeting will be the
first one with Mr Mukherjee after the commission report.
Some states had raised fresh
demands for a higher compensation. Accordingly, the commission is planning to
make a case for that, Mr Asim Dasgupta, the Chairman of the Empowered Committee
of the State Finance Ministers, said recently.
The Committee had earlier sought Rs 80,000 crore.
Source : Exim News Service -
Kolkata, March 9
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