FM to discuss tax reforms, WB may negotiate interest waiver

Union Finance minister Arun Jaitley will meet his state counterparts on Monday as part of the pre-budget consultations and also to discuss the progress towards the proposed Goods and Services Tax (GST). Amit Mitra, the West Bengal finance minister, is in Delhi to attend the meeting.

The long delayed Goods and Services Tax will also figure in the meeting. The ambitious indirect tax reform could not be passed during the Congress-led United Progressive Alliance regime for want of consensus on various issues.

For Bengal, the biggest issue seems to be the waiver/deferment of interest on loans incurred by the erstwhile CPI(M)-led government  from the Centre. ‘While a moratorium may not be possible, the Centre can easily defer the payment of interest for two to three years and then split it in EMIs,’ said Sisir Adhikari, senior Trinamool Congress Member of Parliament.

Jaitley will also sound out his state counterparts on negotiations over Goods and Services Tax, which promises to snuff out a large number of taxes at the central and state level and replace them with a single all-India tax.

The newly-elected BJP government has been toying with the idea of doing away with schemes such as the Jawaharlal Nehru National Urban Renewal Mission and the National Rural Employment Guarantee Scheme.

The Congress seems to be willing to co-operate with the new government to see the measure through. Congress leader Jairam Ramesh had said his party would ‘not do what Narendra Modi did to us on Goods and Services Tax, he single-handedly derailed the most important economic initiative’.

A consensus is essential as the tax reform has to be passed by a two-third majority in both the Houses of Parliament.

Meanwhile, amid concerns over rising bad loans, Jaitley will hold pre-budget consultations with heads of banks and financial institutions on Tuesday to deal with the situation.

Meeting with CMDs and CEOs of banking and financial institutions is scheduled for Tuesday, a day after the finance minister pre-budget consultation with state finance ministers, sources said.

To be presented in the first week of July, it will be the maiden Budget of Jaitley. It will also be the first major policy document of the Narendra Modi government and will spell out the direction for the economy.

Banks and insurance companies are likely to seek tax benefit for their products in the budget.

Bankers are likely to pitch for need to support infrastructure funding and make demand for issue of tax free bonds for this sector.

Intermediaries in the financial sector would suggest for rationalisation of transaction charges in the secondary market.

Jaitley kick started pre-budget consultations with different interest groups last week.