Credit 2% IGST to states first: Capt Abhimanyu

  • HT Correspondent, Hindustan Times, Chandigarh
  • Updated: Dec 11, 2014 19:51 IST

Haryana finance minister captain Abhimanyu on Thursday suggested that 2% of the integrated goods and service tax (IGST) collected should first be credited to the account of the state from where goods or services were exported and debited to the central government account.

He said this would protect the revenue concerns of the states that had strong manufacturing base and high central sales tax (CST) revenue. "However, it will not reduce the credit available to the dealer in the importing state," captain Abhimanyu said after making his suggestions during a meeting of the empowered committee of states' finance ministers in New Delhi.

As an alternative, he suggested that a goods and services tax (GST) compensation fund be created and certain percentage of the IGST credited to the GST compensation fund. The proposed GST council could manage the fund to address the revenue concerns of the states on a permanent basis for the states that were likely to incur huge loss because of the implementing of the GST, the Haryana finance minister added.

The empowered committee deliberated on the latest revised draft of the 122nd Constitution Amendment Bill, 2014, for introducing the GST in the country. Captain Abhimanyu said the Haryana government agreed with the empowered committee recommendation that full GST compensation be paid at least for five years through an independent mechanism, which should be in-built in the constitution.

The parliamentary standing committee on finance had also recommended the GST compensation fund as an in-built mechanism. Haryana, which claims strong manufacturing base, has requested the central government to incorporate a suitable provision in the 122nd Constitution Amendment Bill, 2014, to address the concerns of the states that would lose heavy revenue on the inter-state movement of goods in the GST regime.

Captain Abhimanyu said the state collected revenue to the tune of `1,000 crore a year on account of the purchase tax or VAT (value-added tax) on food grains; but under the GST regime, it had been proposed that the levy would not apply to food grains. "The state's stand has been that the food grains be either kept out of the GST purview or the state be compensated on a permanent basis for the revenue loss on account of this tax," said the Haryana finance minister.

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