Indian states inching towards consensus on GST despite sticking points

After meeting the state finance ministers who assembled here in Kolkata, Union Finance Minister Arun Jaitley said: "Every state supports the idea of GST, except differences of opinion by the Tamil Nadu."

He said it would be ensured in the GST once implemented that any loss of revenue for the first five years are compensated by the centre.

He also ruled out a constitutional cap on the tax as proposed by the Congress which agreed to back the bill but demanded an 18 percent cap on the tax and an independent mechanism to resolve disputes on revenue sharing among states.

West Bengal Finance Minister Amit Mitra, who is the chairman of the empowered committee of state finance ministers on GST, said the government in the state led by Mamata Banerjee is in favour of the GST at the earliest.

Speaking to IBNS, Punjab Finance Minister  Parminder Singh Dhindsa said the main issues at the discussion were  GST compensation- the mechanism and period of GST compensation,  and some issue of dual control and RNR (Revenue Neutral Rate).

The ministers will however meet again in July as in the two-day meeting being held here, no final consensus was arrived at yet.

Dhinsa said as against the stand of Congress party, even the states ruled by the latter agreed that constitutional cap on GST is not feasible.

"Taxation  at times can be increased or decreased, and to put a   cap means you are handicapping the future governments. To make a constitutional amendment is a very big task in itself," he said.

On the one percent additional tax as goods move across states, he said there is yet not any  unanimity yet between the manufacturing and the consuming states on it.