Union Finance Minister Arun Jaitley's plan to bring on board all states to accept a proposed nationwide goods and services tax (GST) could not reach a consensus on Tuesday, reported Reuters. Though broad agreement on the need for such a tax exists, details on optimal rate of taxation remained a concern for states.
A Press Trust of India report noted that except for some reservations expressed by Tamil Nadu, all other states have come to support the GST, an indirect tax reform.
The GST would replace the many existing taxes charged by Centre, states and amongst inter-states to one tax structure, thereby saving huge money for businesses. While a government panel has suggested 17 to 18 percent GST rate, states have decried it as a revenue-losing proposition.
"There is no consensus on the rate. We want a detailed study to ensure there are no revenue losses," Parminder Singh Dhindsa, finance minister of Punjab, told Reuters.
Though Jaitley said there was "no deadline as such," the GST Bill earlier was expected to come into effect by April 1, 2016. Meanwhile, the original author of the bill and the principal opposition party, the Congress, has held out to the passage of the bill in the Upper House on a few issues.
With better numbers in the house, the party has argued, for example, that a proposal allowing states to charge one percent tax on cross-border transit of goods went against the basic tenet of the consumption-based tax, reported the news agency. They have also asked the GST cap to be set at 18 percent and resolve the grievances of states through an independent mechanism.
States have demanded higher provisioning in central allocations to them to offset loses incurred by accepting the new taxation regime.
PTI cited Jaitley as saying that this meeting saw a record attendance of 22 state finance ministers. He added that all of them have submitted their government's detailed views on the GST. Meanwhile, the Reuters report noted that Jaitley has threatened to seek a vote on the bill in the next session of Parliament if all state finance ministers do not reach a conclusion in the next meet in July.