The growing hostility between the government and the Opposition does not seem to have deterred two men-one, the finance minister and the other, BJP leader and Bihar’s deputy CM-from tirelessly pursuing the task of making the Goods and Services Tax(GST) a reality.
A day after P Chidambaram put the chances of the GST bill being passed in Parliament in the UPA’s tenure at 70%, Sushil Modi, who heads the empowered group, said a broad consensus had been evolved on 80% of the issues, but indicated that being poll year, it was a toss up.
“Many issues have to be resolved at the political level. The Prime Minister or finance minister will have to take the initiative. It all depends on the Centre. We are moving in a positive direction, but being election year, one cannot say anything,” Modi told ET.
Away from the heat of Delhi, where the political temperature is rising, the empowered group is meeting in Mussoorie on May 10 and 11 to work out the crucial elements of the GST structure. This includes the revenue neutral rate and the minimum turnover threshold over which the new tax would apply. The sub-committees with officials of centre and state governments as members have already sent their recommendations.
Modi said several issues relating to states can be resolved in the standing committee on finance, which incidentally is also headed by a BJP leader-former finance minister Yashwant Sinha. The parliamentary panel will be a forum to address concerns of parties that are not represented in the empowered committee of state FMs.
“Each party and each state has different concerns. The main anxiety of the states is to protect their revenue. We feel that most of the states’ concerns will be incorporated. On more than 80% issues, there is a broad consensus between Centre and states, but a party or state may have reservation on some thing,” Modi said.
The BJP leader also had a word of praise for Chidambaram’s efforts on GST. “After Chidambaram has become the FM, he has taken keen interest in GST and has been flexible…. I am also trying my best,” Modi said.
Chidambaram removed a key stumbling block in the implementation of the new tax by providing 9,000 crore as compensation for cut in central sales tax, attempting to win over the opposing states. The GST, a major demand of India Inc, will lower the tax component embedded in the cost of a good by removing tax on tax though an efficient pass through for taxes paid on inputs. The tax will only be levied on the value added at every stage of production and eliminate the cascading effect of multiple layers of taxation all over the country. It will also help create a seamless national market, as the plethora of taxes and checks that movement of goods faces will go. GST is India’s most far-reaching tax reform and aims to integrate the country into a common market by dismantling fiscal barriers between states.