FM to lose veto power in GST council, to retain chairmanship
The revised draft of the Constitution Amendment Bill on GST will drop the contentious issue of giving veto powers to the Union Finance Minister in order to bring states on board.business Updated: Aug 15, 2010 11:07 IST
The revised draft of the Constitution Amendment Bill on GST will drop the contentious issue of giving veto powers to the Union Finance Minister in order to bring states on board.
However, the Union Finance Minister will remain the chairman of the council, which will take decisions on the indirect tax system.
With states rejecting the earlier draft on the ground that giving veto powers to the Union Finance Minister would interfere with their fiscal autonomy on indirect taxes, the new draft of the Bill proposes that all states, along with the Centre, would have to agree on a decision in the GST council to make it effective.
Also, states will be given deputy chairmanship of the council on a rotational basis, a key official source told PTI.
"If there is no consensus arrived on any decision taken by the council, then it would be blocked, even if one member rejects a proposal," the source said.
This way, the council would become a recommendatory body, rather than mandatory, as proposed in the original draft.
However, Madhya Pradesh Finance Minister Raghavji wants more clarity on the issue.
"There has been no mechanism suggested on what would be done if there is no consensus," he added.
Finance Minister Pranab Mukherjee would meet the state GST panel on August 18 to discuss the revised draft of the Constitution Amendment Bill.
Before meeting Mukherjee, state finance ministers will meet among themselves on the same day to discuss the revised Constitution Amendment draft to implement GST.
Earlier, efforts to introduce GST from the next fiscal received a setback after states opposed the original draft Bill to amend the Constitution in its present form, saying it provides a veto power to the Union Finance Minister in matters relating to state subjects.
"This proposed draft Constitution Amendment Bill related to GST in its present form is not acceptable to the states," Asim Dasgupta, the Chairman of the Empowered Committee of State Finance Ministers on GST, had said after a meeting of the panel.
He had said states are against infringement on their financial autonomy and have certain reservations on the draft Bill's provisions for the GST Council and the GST Disputes Authority.
The draft had proposed a GST council that would have members from the states and the Centre, with veto power given to the Union Finance Minister.
For any dispute, there would also be a dispute authority, according to the proposed draft.
States fear that giving a veto power to the Union Finance Minister on state taxation issues would curb their fiscal autonomy.