GST rollout in April won't be possible, says BJP

GST rollout in April won't be possible, says BJP
Business Standard, January 7, 2010, Page 5

BS Reporter / New Delhi

The Bharatiya Janata Party (BJP) today said it would not be possible for many states to roll out the Goods and Services Tax (GST) from April 1 as proposed by Finance Minister Pranab Mukherjee, as several contentious issues regarding interest of states had not been addressed.

Senior party leader and former finance minister Yashwant Sinha, who spoke to reporters on the deliberations of the state finance ministers, said the empowered committee of the state finance ministers had worked on the issue but several matters had been left unexplained. The Centre had not shared with the states its view on some of the objections raised by them, he added.

“The BJP has been pointing out that a balance needs to be struck to protect the revenues of the state government, interests of industry and traders and benefits to the consumers at large and to specific sections of society as farmers and those living below the poverty line. The GST structure should not be such that the common man is adversely affected, either by additional tax or any consequent price rise,” the party leader said.

Differences on GST include the revenue neutral rate and revenue buoyancy, threshold limit, value added tax on imports, pending issues of compensating the Central Sales Tax, effective mechanism of levy of tax on textiles, flexibility to the state governments to exempt goods of local importance and include items in the lower rate list.

The BJP also suggested necessary amendment to the Constitution to change the federal structure, but said the issue needed more discussion.

A comprehensive compensation package operated by an independent agency was also needed, it said. Issues of an inter-state movement and the IT preparedness of states, which is imperative before the GST rollout, also needed to be discussed.

Although Sinha denied any differences on the GST issue among the BJP-ruled states (Madhya Pradesh and Gujarat are reportedly favouring the GST), the party statement said “most of the BJP states” endorsed the party view.