Thursday, 11 September 2014

Goods and services tax: Jayalalithaa seeks concessions for states

CHENNAI: Tamil Nadu chief minister J Jayalalithaa on Thursday sought more concessions on the Centre's plan to implement the goods and services tax (GST).

Hoping that the Centre would accept a consensus achieved in the August 20 meeting of the state finance ministers on the issue, Jayalalithaa asked the Centre to permit states to grant exemption on all goods of local importance without any restrictions.


In letters to Union finance minister Arun Jaitley and chief ministers of all states and Union territories, Jayalalithaa said, "Further, to avoid dual control, states should be vested with the control of dealers having a turnover up to Rs 1.5 crore both for intra-state and inter-state supply of goods and services, whereby the Centre can avoid expanding its administrative machinery while collecting CGST (central goods and services tax) from such dealers."


Reiterating her opposition to bring in petroleum products under GST, the chief minister said, "The proposal of the government of India to bring petroleum products under the ambit of the GST is another area of concern which would seriously diminish the limited revenue resources of the states."


The proposed system of dual levy wherein the states would also be empowered to continue the existing levy of tax on the sale of petroleum products in addition to the levy of the GST was not acceptable, as a portion of the tax on petroleum products would still be eligible for input tax credit, she said.


The chief minister wanted the Centre to keep petroleum and petroleum products out of the GST ambit.


Tamil Nadu is presently levying higher taxes on tobacco and tobacco products at rates of tax ranging from 14.5% to 20%. Considering the health hazards involved in tobacco consumption, the government of India is presently urging all the states to levy higher VAT on tobacco and tobacco products. However, the draft Constitution Amendment Bill does not include enabling provisions for states to levy higher taxes on tobacco and tobacco products on a par with the Centre.


"I, therefore, urge that states should also be empowered to levy higher taxes on tobacco and tobacco products on a par with powers proposed to be vested with the Centre to levy excise duty on tobacco and tobacco products in the draft Bill," she said.


"It cannot be denied that manufacturing states like Tamil Nadu stand to permanently lose substantial revenue if the GST is implemented, due to the sudden shift of levy from the point of origin to the point of destination. In addition to the revenue loss arising out of phasing out of the CST and transfer of input tax credit on inter-state sales and inter-state stock transfers, the state also stands to lose substantial revenue arising out of sub-summation of other taxes such as entertainment tax, luxury tax, entry tax on vehicles and betting tax," the chief minister told Jaitley.


"May I also reiterate my views that, before the enactment of the Constitutional Amendment Bill on GST is taken up, the government of India should strive for a broad consensus on the important issues relating to the GST like compensation period and methodology, revenue neutral rates, floor rates with bands, commodities to be excluded from the GST, the IGST Model and clarity on dual administrative control, so that the genuine apprehension of the states over loss of fiscal autonomy and permanent revenue loss are allayed?"



http://ift.tt/WZJfY8 and Services Tax,Concessions


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