Will the GST roll in time?

Demonetisation rules GST meet; state finance ministers express concern

Keeping fingers crossed on breakthrough in GST Council: Jaitley

Agency Report | New Delhi | 3 December, 2016 | 11:40 PM

The issue of demonetisation seemed to dominate the Goods and Services Tax (GST) Council meeting as the state Finance Ministers complained of falling revenues and Union Finance Minister Arun Jaitley, who chaired the meet, having to allow a discussion on it.

“The state finance ministers (FMs) wanted a discussion on the fiscal situation of states after demonetisation. But it does not come under the purview of GST council, because it covers only indirect tax,” Jaitley told media persons after the fifth Council meet here.

“After the GST council meet, the FMs discussed the situation of demonetisation. Political stand of parties was reflected more in the discussions,” he added.

West Bengal Finance Minister Amit Mitra told media persons that the issue was raised by all states at the Council meet as their revenues have been hit hard.

‘All the states raised voice on discussion on demonetisation. It has to do something on states’ revenues. All states asked for a discussion and the Finance Minister did grant the discussion.

“Tax collections of states and centre will be low (because of demonetization). States are deeply concerned about their falling revenues. How do we implement the health and education programmes of the states?” he added.

Hinting at a continued logjam in the GST Council due to the political stand-off on demonetisation, Mitra said: “I cannot predict if the GST issue will be resolved in the Council. I am not a ‘star reader’. Earlier the compensation was based on GST, but now the revenues are falling because of two factors – GST and demonetisation. So compensation will be huge.”

Mitra further said that the GDP in the third quarter is likely to be negative while GDP in the fourth quarter may be very low as a result of demonetisation.
With the fifth meeting of the Goods and Services Tax (GST) Council remaining inconclusive as the impasse over the issue of assessee jurisdiction continued, Arun Jaitley said he was keeping his fingers crossed.

“The critical issue is of cross empowerment or dual control. Are we close to a resolution? I will still keep my fingers crossed,” he told media persons after the two-day GST Council meeting came to an end here.

“Logjams are created only to be broken. We will discuss it further on December 11 and 12,” he added.

With five meetings of the GST Council being held, the issue of dual control or who will exercise control over GST assessees — the Centre or the states – remains critical.

“The discussions were held. Two-three suggestions have come of horizontal division of assessees, vertical division and even a suggestion of hybrid of the two,” Jaitley said.

The Council also could not complete the approval process on the four drafts – Central GST (cGST), State GST (sGST), Integrated GST and State Compensation Law in the meeting. After the approval from the Council, the cGST needs to be approved by the Parliament while sGST will have to be approved by state legislatures.

“There were discussions on cGST and sGST. Both the drafts were discussed simultaneously. We have started clause by clause approval of the two. Nine clauses of each have been discussed and the Council is moving towards consensus on these,” Jaitley said.

“It will take a lot of time for the approval (on the drafts), it seems,” he added.

The approval on the four draft laws will also be on the agenda in the Council’s next meeting, he said.

“We can’t have an implementation of GST without resolution of all the issues in the Council. The approach is to reach an agreement with a consensus of all,” Jaitley said.

He said that the government is still targeting April 1 as the implementation date for the new indirect tax regime.

“There are not much options. The time option is only between April 1 and September 15,” he added. (IANS)