That the Centre and the States have reached a consensus on the goods and services tax regime (GST) augurs well for the nation. If the decisions of the empowered committee of state finance ministers, which met at Bhubaneswar for two days this week, are anything to go by, the states will get some time to watch how the Centre implements it before they can join the bandwagon. It is a different matter that there is no provision to let them have such a freedom. What is significant is that the Centre has agreed to incorporate such a provision in the GST Bill. The modalities to be followed during the interregnum will have to be worked out soon.
The deliberations at Bhubaneswar bear out the fact that the Centre has to follow a realistic policy when it comes to the GST. One of the provisions of the Bill, which agitates the states, allows the Centre to unilaterally decide tax rates on certain commodities. However, it was agreed that the Centre will phase out the concept of declared goods and the states will have autonomy to declare their GST. Also, the proposal to have a dispute settlement authority (DSA) was shot down on the ground that the GST council, chaired by the Union finance minister with adequate state representation, was competent to handle all such disputes.
The GST marks a new beginning in taxation. It will replace all indirect taxes levied on goods and services by the Central and state governments. India being a federal country, it has to be implemented concurrently by the central and state governments as central GST and state GST respectively. Already, 140 countries have introduced the GST. There are as many models as there are countries to follow the new regime. In the European Union, for instance, the rates of value-added tax vary across member states. So, the Centre should have no difficulty in accepting the demands of the States that they should have freedom to fix state-level GST rates. For the common man, it will, hopefully, remove multiple taxes that jack up retail prices.