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Chidambaram, Sushil Modi to meet, discuss GST today

Finance Minister P Chidambaram is likely to discuss issues related to implementation of GST with Sushil Modi, chairperson of the Empowered Committee of State Finance Ministers, today.

‘The Finance Minister will meet Modi on October 25 to discuss issues related to implementation of GST,’ a senior Finance Ministry official said. Chidambaram had earlier exuded confidence that the Centre would be able to sort out issues concerning implementation of the goods and services tax (GST) shortly. ‘I will meet with Sushil Modi.. Thereafter, I have asked for a meeting with the entire Empowered Committee and I am confident that with these two meetings and perhaps one more meeting, if necessary, we will be able to resolve all the issues concerning GST,’ he had said.

He had also said that the passage of the GST Bill in Parliament should be easy once the State Finance Ministers were on board and all of them agreed on what was needed to be done. The goods and services tax was to be introduced from April 2010 and has missed several deadlines.

Issues related to the GST network (GSTN) and the matter of further Central sales tax (CST) are among the causes of delay in the implementation of the GST, which will replace most of the indirect taxes at the central and the state levels.

Moreover, the states are also raising issues relating to the dispute settlement mechanism and exclusion of certain products from the goods and services tax system.

The CST is collected by the Centre and distributed among states. As a precursor to GST, the Centre and states had agreed in April, 2007 to phase out the Central sales tax over a period of three years and in line, the CST rate was reduced to 3 per cent and then to 2 per cent. The Centre had already compensated the states for the losses incurred up to 2010-11. As the Centre refused to go on compensating the states for the delay in implementation of GST, the states had argued that when it was decided to phase out the CST, it was presumed that GST would be implemented from April, 2010.

Recently, Sushil Modi had sought Prime Minister Manmohan Singh’s intervention to resolve the compensation issue. The states have also suggested that they should be allowed to restore the Central sales tax rate to 4 per cent in case the Central government was not able to pay any further compensation.

A Constitution Amendment Bill on the GST was introduced in the Lok Sabha in March last year and the Parliamentary Committee on goods and services tax is expected to give its report soon. Earlier in August, Chidambaram had expressed the hope that the Constitutional Amendment Bill to implement the Goods and Services Tax regime (GST) would be passed by March 2013.   
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