State FMs to elect empowered panel chief today, discuss model GST law

State finance ministers will meet on Friday to elect the new Chairman of the Empowered Committee and also discuss the model Goods and Services (GST) Tax law as well as report on the revenue neutral rate. The Empowered Committee of State Finance Ministers has to elect the new Chairman as K M Mani has resigned from the post subsequent to stepping down as the Kerala Finance Minister.

The Centre had last month circulated among states the draft of CGST, SGST and iGST for their comments. Besides, the report of the National Institute of Public Finance and Policy (NIPFP) on the revenue neutral rate (RNR) has also been circulated among the states. “The panel will discuss the model laws and i-GST law. Also NIPFP report on RNR may come up for discussion,” a government official said. The RNR is the one at which there will be no revenue loss to the states after GST implementation. A sub-committee on GST had in November 2014 suggested that the RNR of GST be pegged at about 27 per cent. The sub panel had suggested states GST at 13.91 per cent and Central GST at 12.77 per cent. 

However, a recalculation of RNR was necessary as that RNR does not take into account the taxation of petroleum products as also the 1 per cent additional tax which states can levy as part of the GST Constitution Amendment Bill.