Finance Minister Pranab Mukherjee called BJP leaders L.K. Advani, Sushma Swaraj and Arun Jaitley to a lunch meeting on Monday to elicit the BJP’s support for the goods and services tax (GST) regime that the government is planning to roll out from the next fiscal year.
The shift to “dual” GST – which will subsume all indirect taxes into a central GST and a state GST – will entail a constitutional amendment, for which the support of the principal opposition party is crucial.
The BJP has backed the move – just like the Congress – but state governments also need to be brought on board before the new regime kicks off.
The problem: the GST will lead to better collections for affluent states, which will have higher value-addition and consumption, and the backward states fear revenue loss. They would face universal tax rates and all other state taxes would anyway get subsumed in the state GST. “BJP is in support of GST but some of our state governments like M.P. have issues. This makes the matter complex,” said a BJP leader.