GST impasse continues between the Centre and States

The Dollar Business Bureau

The impasse over the Goods and Services Tax (GST) still continues with the Centre and the states refusing to budge from their positions on matters such as control of taxpayers and taxes on high sea trade, a deadlock that threatens to postpone the GST rollout till September.

The recent meeting of the GST Council, which was 8th in a row, had made little headway in ironing out differences with eventhe non-BJP ruled states expecting September as the deadline for rolling out the new indirect tax regime.

The next GST Council’s meeting, on January 16 would have discussions on the jurisdiction issue over assessees and the Council members would also try to reach a final solution on the taxation issue of territorial waters.

Thomas Isaac, Kerala’s Finance Minister, speaking to the media said that the other remaining matters before the GST Council would comprise ways to finance the compensation to states after the rollout of GST and participation of states in the Integrated GST (IGST).

“Working overtime, it should be possible to meet the deadline of September. I am not very optimistic about rolling GST out in June/July. Because it is a new tax and lot of complexity involved, it would be better to move in after full preparation. So GST, to my understanding, will be implemented from September,” he said.

The Minister further said that some states demanded the revenue from GST under the highest tax bracket to be shared with the Centre in 60:40 ratio, instead of the current 50:50 sharing ratio. There are four different tax rates that have been fixed in the GST.

“The Centre did not reply to the demand however it was decided to be debated later,” he added.

With regards to taxing territorial waters, Isaac said, “Although SEZ is a territory of state, but it is considered as an independent territory. Rather similar treatment can be given to the territorial waters under the new GST law. The Centre appears to be accepting this position, it has not provided its word but assured to respond in January 16 meeting.”