The Empowered Committee (EC) of State Finance Ministers will meet next month to decide on the reports for a model legislation and design of the proposed Goods and Services Tax (GST).
“The Empowered Committee will meet in Mussoorie, Uttarkhand on May 10-11 to ponder over the progress made by two committees constituted during the Bhubaneswar meet in January,” said a senior official at the Finance Ministry.
The Committee would also try to get a clarity from the Centre on when would the dues of states be cleared to make up for the losses on account of reduction in Central Sales Tax rate so as to clear the way for the implementation of the new indirect taxes regime the official added.
The Centre has agreed to give compensation of Rs. 34,000 crore to states for lowering CST rates.
In November, the government had set up two sub-committees to resolve the issues of compensation to states for revenue loss on account of a reduction in central sales tax and the final design of GST.
These sub-committees, comprising officials from both the Centre and states, had met yesterday in Patna, to thrash out the contentious issues and are likely to submit their reports by the third week of April.
The implementation of GST, which seeks to remove the cascading impact of indirect taxes, has been delayed by three years due to a lack of consensus on several issues between the Centre and the states
Recently, Sushil Modi, chairman of empowered committee of state finance ministers and Bihar deputy chief minister, had said that 80 per cent of contentious issues related to GST have been resolved.
Besides, states had also reached a broad consensus on the design of GST under which states will be free to decide on the time of its introduction.
There was also consensus on the contentious issue of CST compensation with states agreeing to accept a lower package of Rs. 34,000 crore.
The Centre will bear 100 per cent of the loss accrued to states in 2010-11 fiscal on account of lowering CST.
However, for 2011-12 and 2012-13 financial years, the Centre will provide for 75 per cent and 50 per cent of the losses.
CST, a tax imposed on the inter-state movement of goods was reduced from 4 per cent to 3 per cent in 2007-08, and further to 2 per cent in 2008-09 after introduction of Value Added tax (VAT).
Mr Chidambaram while presenting the Budget 2013-14 in Parliament, had announced that the government will release Rs. 9,000 crore as the first instalment of compensation for losses incurred by states due to reduction in the Central Sales Tax rate, a precondition for the roll-out of GST – the indirect tax regime.