The Goods and Services Tax Council will begin a two-day meeting on Thursday to decide on outstanding issues such as a tax rate and the levy of cesses, PTI reported. Union Minister of State for Finance AR Meghwal expressed confidence that the new tax regime would be rolled out by April 1, 2017, the deadline the central government has set for itself.
The Centre is likely to press for the introduction of a four-tier tax rate structure of 8%, 12%, 18% and 26%, at the meeting that will be chaired by Union Finance Minister Arun Jaitley. Meghwal said the central government would make all efforts to reach a consensus on the outstanding issues. “We want everyone to come around on all issues,” he said.
The Centre will also seek to levy an additional cess on goods such as tobacco and aerated drinks for the purpose of creating a Rs 50,000 crore fund. The fund will be used to compensate states for revenue losses during the transition to the new regime.
At its last meeting in October, the Centre and states failed to reach a consensus on the rate bands for the new regime. The states also reportedly failed to come to an agreement on the Centre’s proposal to impose a cess over the GST on luxury items. Revenue Secretary Hasmukh Adhia said the states were of the opinion that it was not possible to segregate goods and services. Meanwhile, Jaitley said the final tax slabs would depend on the source of funds that the Centre intends to use to compensate states for revenue losses incurred after the shift to the GST regime.
However, states have hardened their opposition to the method of implementation of the tax. On Wednesday, West Bengal Finance Minister Amit Mitra accused the Centre of not revealing information on the service taxpayer base from states, which he said influenced negotiations between the two sides on the sharing of administrative powers between them. In a letter to Jaitley, Mitra said new data placed the taxpayer base to be at 3.05 million, a sharp rise from the figure of 1.1 million given to states previously, Mint reported.
Similarly, Kerala Finance Minister Thomas Isaac has also expressed concerns regarding the rate of tax. At the previous Council meeting, he reportedly demanded that the highest rate be fixed at 30% so that commonly-used items would be kept out of the GST’s ambit or levied with a lower cess.