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States reject GST Bill, slam move to bring petro-products under ambit

States reject GST Bill, slam move to bring petro-products under ambit
At a meeting of the Empowered Committee of State Finance Ministers, the Centre's plan to bring petroleum goods under GST regime was opposed.

They also objected to the the Constitutional Amendment Bill as it does not contain provisions for giving states compensation against any possible loss of revenue after GST roll-out for five years.
"There is no consensus between the Centre and states on these three things (compensation issue, petrol tax and entry tax). The Empowered Committee is not supporting the Bill without these three things," Empowered Committee Chairman Abdul Rahim Rather said after a meeting of the state Finance Ministers.

The central government, he stressed, "will have to respect views of the states."

The states want the Centre to compensate them for any loss of revenue on implementation of the GST for five years and a clause regarding the compensation be included in the Constitution Amendment Bill, Rather said.

The state governments are also keen on keeping the entry tax and petro tax out of the ambit of the GST. In a bid to roll out the GST, which would subsume excise and service taxes, the Centre has come out with a new Constitutional Amendment Bill. "Government hasn't agreed to our recommendations made last time, except one recommendation. We had said that the share of Union government in GST should go to the divisible pool and should be devolved among states, that has been agreed by Centre," Rather added.

He said that the draft of the new Constitutional Amendment Bill, which was received by the Committee earlier in the month, did not take on board the suggestions of the state finance ministers.
"But we were surprised to know that government hasn't agreed to our recommendations made last time, except one recommendation with regard to putting GST in divisible pool," he added.

However, with regard to petroleum products, entry tax and compensation, he said, "the Union Government has not agreed to our recommendation."

Rather welcomed the decision of the Centre to release Rs 11,000 crore to states as compensation towards the central sales tax (CST) this financial year.

"So far as CST compensation is concerned, we are happy to know that the Centre has agreed to keep a provision of Rs 11,000 crore in the current year's budget...that will settle the claim of CST compensation up to the year 2010-11," he said.
PTI

PTI

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