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Govt will have to create an ecosystem of trust to pass GST: Mitra

business Updated: Jul 27, 2016 18:29 IST
Suchetana Ray
Suchetana Ray
Hindustan Times
Amit Mitra

Amit Mitra during the recently concluded elections in West Bengal. (PTI)

It is the duty of the government to manage the atmosphere of Parliament and create an ecosystem of trust to help pass the nationwide Goods and Services Tax (GST), West Bengal finance minister and head of empowered committee of state finance ministers on GST Amit Mitra told HT.

”At present, there is dissent among the Opposition parties regarding several issues. But the government will have to create an ecosystem of trust and only then can GST be passed. GST is not outside the political discourse in Parliament,” Mitra said.

The Centre and states on Tuesday agreed on the broad principles to fix the tax rate, setting the stage for the passage of the Constitution Amendment Bill on GST in the Rajya Sabha as early as next week.Finance minister Arun Jaitley met state finance ministers as the government stepped up efforts to iron out differences on the proposed GST that has remained stuck in Parliament for want of political consensus.

”Minor concerns remain. For example, the GST network, which is the IT back-up to this tax rollout is still work in progress, states are yet to see the full extent of this network. So when it is presented, there might be some minor issues with it,” Mitra added.

But even if the Bill is passed in the current session of Parliament, many state FMs on conditions of anonymity have expressed their doubts about implementing GST from April 1, 2017.

”This question (on implementing GST from April 1, 2017) can be decided by Parliament and the will of the government. But a lot of ground-level work is still left,” Mirta said.

The most contentious issue regarding the GST rollout has been the revenue neutral rate of the tax system. While Congress has agreed to let go of it demand of capping the rate at 18% in the Amendment Bill, several states are still concerned about it. “States also do not want the GST rate to be capped or mentioned in the Amendment Bill, but we have formulated a principal for deciding the rate, and the Centre has promised to include that in the Bill,” Mitra said. “During years of high inflation, the tax rate should not add to the burden of the common man. Secondly, whatever the rate, the revenue generating capacity of states should be protected.”

The other concern is the dual control of states and the Centre over taxing businesses. “States were unanimous in demanding that the Centre will not have the power to tax businesses with a turnover below R1.5 crore. And to support the Constitutional Amendment Bill, states needed assurance on the issue of dual control. The finance minister has assured that this demand will be met, and it will be part of the Amendment Bill,” Mitra added.