About GST: Still More To Do

After getting President’s approval for introducing a Constitution Amendment Bill in Parliament, the Government finally moves a step closer towards the rolling out of the GST. In other words, the Government finally introduced a Constitution Amendment Bill in Parliament but there are some issues on which most of the states had expressed concerns.

The Constitutional Amendment Bill proposes to constitute a GST Council and to establish a Dispute Settlement Body. Therefore, the two main pillars of the Goods and Services Tax i.e. GST Council and the Dispute Settlement Body would remain the Central part of the GST structure. GST Council will be headed by the Finance Minister with members from States. The Council will be empowered to recommend tax rates and exemption and threshold limits for Good and Services.

Some States are favouring the phased approach for amending the Constitution whereas other states are of the view that whatever Constitutional Amendment is required should be made fully before taking any further step. In the phased approach, the main focus is on allowing the Centre and the States to share their tax base and for this only initial amendment will be made to the Constitution. However, the two main pillars of the Goods and the Services Tax i.e. GST Council and the Dispute Settlement Authority will be kept outside the Constitution to start with and if required, both could be given a Green signal with Constitutional Amendment at a later stage. It looks like that an experiment will be carried out with GST and if that not comes out successful than the other alternatives are also available that can be looked upon at a later stage.

On the issue of Dispute Settlement Body, the States are demanding that they should be individually allowed to make laws on the creation of such a body, instead of the Centre setting it up through an amendment to the Constitution. The States are basically looking to protect their fiscal autonomy which they think will get affected in the new tax regime.

Recently Mr. Saurabh Patel, Minister of state for finance and industries, government of Gujarat said that the Government is trying to take away the autonomy of the States. VAT would no longer be the state subject. The Parliament will get all the power to decide on the exemptions and tax rates.

Consensus is the only word on which the future of the Goods and Services depends but a lot of barriers are still there in front of the Finance Ministry to achieve that with the Empowered Committee of the State Finance Ministers.

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