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Centre-state gridlock over GST jurisdiction remains, could threaten tax rollout

india Updated: Nov 20, 2016 22:26 IST

Union finance minister Arun Jaitley said discussions over the administrative control under the GST between the Centre and states remained “incomplete”. (PTI)

Stalemate between the Centre and states over administrative control under the proposed goods and services tax (GST) regime continued on Sunday with an informal meet called by finance minister Arun Jaitley failing to break the deadlock.

Jaitley’s informal meeting with state finance ministers failed to arrive at a common ground on how Centre and states will control those being assessed under the new regime that will subsume an array of taxes like excise duty and service tax as well as VAT, multiple ministers participating in the meeting said.

With states unrelenting on their position of being given right to control all those being assessed with up to Rs 1.5 crore annual turnover, it was decided that officials will meet again on November 21 before the meeting of the all powerful GST Council on November 25.

“The meeting has remained incomplete. Discussions will continue on November 25,” Jaitley told reporters after the over three hour long meeting.

The issue has remained a contentious one during the previous two GST Council meetings and any disagreement at the next meet holds potential of derailing the rollout of the tax from the targeted April 1, 2017.

Read | GST Council sets rates, four main tax slabs ranging from 5% to 28%

Jaitley had earlier this month stated that the proposed GST needs to be rolled out by September 16, 2017 before the validity of the Constitutional Amendment brought in by Centre and ratified by states expires.

States like West Bengal, Kerala, Uttarakhand, Uttar Pradesh and Tamil Nadu have insisted on exclusive control over small taxpayers, who earn less than Rs 1.5 crore in annual revenue, for both goods and services.

Uttarakhand finance minister Indira Hridayesh said states demanded exclusive control for both goods and service tax assessees of Rs 1.5 crore and below.

“Centre is agreeable on goods, but is not yielding on services. States are looking at their interest to safeguard their revenue. Centre will have to yield to states to get the CGST and IGST bills passed. A middle ground on the issue has to be worked out politically,” she said.

Kerala Finance Minister Thomas Issac said it is a stalemate and his state is unwilling to compromise as it has virtually given up its taxation rights.

Also read | Passage of GST bill could take a hit over Modi’s demonetisation move