The Centre must be given credit that it has accommodated most of the concerns of the states on Goods and Services Tax, clearing hurdles for roll out of India’s most ambitious tax reforms, from July this year. Even West Bengal, headed by Mamata Banerjee, the most fierce adversary of the Narendra Modi government, has come on board.
Registering his dissent apparently for the sake of it, West Bengal Finance Minister Amit Mitra conceded, after the last GST Council meeting, that 90% of the states’ demands with regard to the contentious issue of dual control had been met. With a week to go for the start of the Budget session of Parliament, consensus on GST appears to be positive for reviving the economic sentiment which has been shattered by the ill-conceived move of demonetisation.
As the next meeting of the GST Council has been fixed for February 18, it is expected that the drafts of the enabling legislations both for Parliament and the state Assemblies should be cleared by the Council on that date itself.
Even as the roll out has been delayed till July, work must continue on the remaining issues at a good pace so that it does not hit any more roadblock. Having shown enough flexibility so far, the NDA government must ensure that the political environment is not vitiated between the BJP and opposition parties, particularly the Congress and the Trinamool Congress.
Extra restraint must be shown by the principal ruling party at the Centre since the Budget session is taking place in the thick of high stake elections for state Assemblies in Uttar Pradesh and Punjab among three other states. At least on the electoral front, the BJP and the Trinamool Congress are not face to face in the impending state elections, reducing the chances of flare up.
Finance Minister Arun Jaitley has made it clear that each taxpayer would be assessed by single authority, disallowing discretion in audit and scrutiny. The industry and trade had apprehensions whether they would be caught between the Centre and the states.
As per the broad agreement reached at the last council meeting, 90% of the audit and scrutiny would be done by the states for the assessees with annual turnover of Rs 1.50 crore and the balance by the Centre. For this limit, the ratio is 50:50. Accommodating the states on the territorial jurisdiction of sea trade up to 12 nautical miles has also created goodwill for the Centre. Whatever remaining issues are left out, must be thrashed out for passage of the enabling laws.