GST bill: Himachal assured compensation for revenue loss

  • HT Correspondent, Hindustan Times, Shimla
  • Updated: Dec 19, 2014 19:23 IST

The central government tabled the Goods & Service Tax (GST) Bill in the Lok Sabha on Friday with most of the demands of the Himachal Pradesh government having been taken into consideration. The state had urged the central government to keep petroleum goods, tobacco products and liquor out of the bill's ambit.

However, the central government has proposed to keep liquor out from bill's ambit while compensating the state for losses incurred due to merger of taxes over petroleum goods, which was one of the contentious issues.

Himachal finance secretary Shrikant Baldi said GST was beneficial for the state and uniform tax was a long pending demand made by several sectors. “The central government has assured all the contentious issues would be addressed. We are not opposing GST but protecting out rights and are hopeful the central government will compensate the state for losses,” he added.

A pre-budget meeting is scheduled in New Delhi on December 26 at which the GST issue will also be taken up. Earlier on December 11 a meeting was held for evolving a consensus on GST with most states against the bill, fearing revenue losses.

Sources said the GST bill will ensure compensation to states for five years. The central government will provide full compensation for three years and then gradually reduce it. Tobacco products were a major source of revenues for the state besides petroleum goods.

Implementation of GST will merge several taxes levied by the state as well as central governments. The Himachal government faces losses of over `640 crore in tax revenues if GST is imposed and may lose `400 crore if central sales tax is abolished. However, introduction of GST will not lead to withdrawal of excise waivers for industries.

Earlier in September the Himachal government apprised the 14th finance commission about its fears over the rolling out of GST and also sought compensation from the central government.

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