New Delhi, October 20: The Goods and Services Tax (GST) Council cut short the 3 day meeting of center and the states, a day ahead the schedule yesterday and failed to arrive at a final agreement on paper.
However Finance Minister Arun Jaitely looked positive after the meeting and said, “We have virtually converged on a consensus. The technical issues will be sorted out and a formal decision will be announced at the next meeting.”
He further said: The Goods and Services Tax (GST) Council meeting today discussed the issue relating to different rates of tax. Rates also depend on source of funds, on the basis of which compensation to losing states will be funded. Decision on a rate structure is possible once this is decided.
According to FM, issues of “dual control” for tax assessments would be decided in the scheduled meeting of council on November 3 & 4. “The question is whether the compensation will be funded from the rate structure itself, or some other sources, or some cess. Once this becomes clear, it will be possible to decide on the rate structure,” he added.
“If these two issues (compensation funding and dual control) are settled, then a fifth meeting of the council on November 9-10 will take up the issue of draft legislations,” Jaitley said.
Although GST which was supposed to be a single uniform tax reformation is now proposed to be a four-slab structure comprising of 6, 12, 18 and 26 %. The proposed cess on highest slab of 26 % (sin tax) is opposed by many states.
The issue of a compensation fund is a major hurdle on the block. Once the rate is set, the matter of funding mechanism for compensation payments by the Centre could be taken up.