New Delhi | The Empowered Committee of State Finance Ministers will meet on March 20 to elect its new chairman. The committee at present is engaged in preparing a framework for implementation of Goods and Services Tax (GST). The new chairman is likely to be from a non-BJP ruled state, going by convention, sources said.
Union Finance Minister Arun Jaitley will address the state FMs on Friday, they added. Among those tipped for the job includes Kerala Finance Minister K M Mani and West Bengal Finance Minister Amit Mitra. The post of the Empowered Committee Chairman fell vacant after Abdul Rahim Rather quit following defeat of National Conference in Jammu & Kashmir assembly elections.
The election of the new chairman assumes significance as the Narendra Modi government is keen to roll out Goods and Services Tax from April 1, 2016. I have already introduced the Bill to amend the Constitution of India for Goods and Services Tax (GST) in the last session of this august House, Finance Minister Arun Jaitley had said in his Budget speech.
GST is expected to play a transformative role in the way our economy functions. It will add buoyancy to our economy by developing a common Indian market and reducing the cascading effect on the cost of goods and services. We are moving in various fronts to implement GST from the next year, he had said. GST, the new indirect taxes regime which will subsume various levies like excise, service and various local taxes.
Seeking to facilitate the roll out of comprehensive indirect tax reform GST, the new indirect taxes regime which will subsume various levies like excise, service and various local taxes, the government yesterday approved the release of Rs 33,000 crore in tranches to states and Union Territories. This is to compensate them for revenue loss on account of phasing out of Central Sales Tax for three financial years up to 2012-13.
In the first phase, Rs 10,800 crore is payable for 2010-11 as balance CST compensation, sources said. There is a provision in the Budget for CST compensation in the revised estimates of 2014-15. As part of the roll-out of proposed GST regime, the CST is being phased out and has been reduced to 2 per cent, from the earlier 4 per cent. The Centre collects CST and distributes it among states.
CST, a tax imposed on the inter-state movement of goods, was reduced from 4 per cent to 3 per cent in 2007-08 and further to 2 per cent in 2008-09 after the introduction of Value-Added Tax (VAT). The Centre had then promised the states that it would bear losses due to reduction of CST. The amount is proposed to be released in 2014-15 and the subsequent two fiscals.
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