The Punjab government on Tuesday expressed its reservation on the constitutional validity of the proposal of Gujarat for changing the present structure of goods and service tax (GST).
Expressing apprehensions at the legality of such a proposal, state finance minister Parminder Singh Dhindsa, participating in the empowered committee meeting in Delhi, said the proposal to change the present structure of GST would go against the basic principles of the GST that the tax should be destination-based.
Similarly, the proposed flow of funds from the central GST would reduce the revenue of the divisible taxes between various states.
The meeting was presided over by Jammu and Kashmir finance minister Abdul Rahim Rather.
Seeking destination-based tax, he said it would reduce imbalance in industrial development so as to reduce costs of freight and industry would be established close to consumption areas.
Dhindsa said the ‘destination principle’ of the proposal would result in cost-effectiveness and reduction in price so it was beneficial to the consumer and should be adopted.