The government on Thursday said that the implementation of the much anticipated comprehensive tax regime — the Goods and Services Tax (GST) — will be “sooner than later” and the government was engaged with the states with an open mind on the subject.

“The Centre is in constant engagement with the states...the timeline as I said sooner than later,” Commerce Minister Nirmala Sitharaman said while briefing the media after the day-long meeting of Finance Minister Arun Jaitley with finance ministers from different states.

It has been four years since the idea of GST was mooted  by the then Finance Minister Pranab Mukherjee who while presenting the Budget on July 6, 2009, said GST would come into effect from April 2010.

GST is a long-pending comprehensive tax reform that seeks to levy on manufacture, sale and consumption of goods and services at national level.

Referring to concerns being flagged by various states, Empowered Committee Chairman and J&K Finance Minister Abdul Rahim Rather said that “there are certain areas of disagreement between the states and the Centre. Like petroleum products, in the Shillong meeting we had made a consensus that petroleum products should be kept outside GST, it needs to be subsume”.

“Every state wants GST to be implemented. Only they want their concerns are addressed. That will be done I think,” Rather said.

Regarding compensating the states post the implementation of GST, Sitharaman said, “We are looking at CST (Central Sales Tax) and are trying to understand the issue in greater details.”

Rather  said, the revenue loss to states due to implementation of GST should be compensated by the Centre. “Government of India has said it will give compensation for three years, but it has not agreed to make compensation to make it a part of the constitution through amendment. But states are insisting that compensation should be a part of the constitution amendment,” he said.

Further, he said entry tax should not be subsumed but government of India as not yet agreed to this a well.

Rather also said that states have also demanded that the Centre’s tax should go to the divisible tax pool and states should get their share according to the recommendations of the Finance Commission.

After the meeting, West Bengal Finance Minister Amit Mitra said, “In the case of CST, it was most unexpected that after saying they will compensate the states, the states lowered CST from 4 per cent to 2 per cent. But when came the time for compensation that compensation was denied.”

After his last meeting with states Jaitley while expressing concern at the economic slowdown said, “Tax collections are only at 10% of the GDP, compared to the initial budget estimates of 10.9%. India can ill afford this trend.”

It is estimated that India will gain $15 billion a year by implementing GST. (Indian Express)