GST: Naidu for Centre’s nod to levy tax on inter-state bissness

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Andhra Pradesh CM N Chandrababu Naidu will soon write a letter to the Union government seeking to allow state governments to levy tax on trade between states.Respective state assemblies need to pass the three draft laws the central GST law, the integrated GST (meant for trade between the states) law, and the compensation law for state governments.

“The main concern of Andhra Pradesh is with some provisions of the central GST and Integrated GST, because of which we will lose income,” said officials of the finance department. Naidu will draw the Centre’s attention to the provisions of the draft IGST law on inter-state sales taxes. The draft says that the IGST rate cannot be more than 28%, the highest tax slab agreed by the GST Council. The draft law also proposes to empower state government tax officials in certain cases to act as administrators of the Act, besides central tax authorities.

However, by and large the power will remain with the Centre. The chief minister will seek for more autonomy to states in this aspect. Another aspect that AP will raise is removal of the jurisdiction of territorial waters from state governments. Along with AP other coastal states like West Bengal, Odisha, and Kerala have objected to the new provision that prohibited them to levy tax on Value Added Tax (VAT) on transactions taking place in territorial waters extending up to 12 nautical miles from coast.

With the powers being transferred, the state would lose up to `600 crore a year.There is a case pending in SC.Karnataka High Court gave judgement in favour of state governments. ” AP fears that even though the Centre will partially allow state government’s control, a deemed provision in the legislation will ensure more autonomy for states,” said officials.

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