The Bold Voice of J&K

GST hurdle

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Though most of the states have welcomed GST because it is beneficial for both states and Centre, the biggest concern is about  the compensation. States are worried about the revenue  loss. The Union Govt stand is that compensation will be given in phased manner with first three years full compensation, fourth year 75 per cent and fifth year 50 per cent. The point of contention is that the states have demanded full compensation for the five year period of GST replacing their local taxes, a  position that may create hurdle in plans  for  roll out  of new  tax regime from next year. The proposed Goods and Services Tax (GST) will help reduce  the  costs  and fast track growth. The Centre  feels implementation of the tax regime has the  potential to significantly improve  the growth story. The states fear  fall in revenue collection to their kitty and  to overcome  these deficits have been  demanding  tax reliefs  in manufacturing  and exports of goods  and services. Efforts have been on since 2007 to evolve  a consensus to bring  in the  reforms  and every time it failed to materialise and  situation remained  static till date. Most of the states which opposed the new tax regime have been demanding  compensation  for phasing  out  Central Sales  Tax (CST) which has remained  a concern for  Union Govt. Not only this  states  have been  looking forward  to revenue protection. During the UPA rule some of the BJP-ruled states like Madhya Pradesh and Gujarat had blocked the ambitious tax reforms arguing that  the states would  lose  manoeuvering space. States like Tamil Nadu which is  a net exporter with  large manufacturing  base fears  large  revenue erosion if the tax rules  are introduced. Jammu and Kashmir has been strong supporter during the NC-Cong  coalition  but  with PDP-BJP coming to power  it opted out of it. The former Finance Minister Abdul Rahim Rather way back had  asked the Centre  for  protection of the financial and constitutional guarantees available   to the State under its own Constitution and Constitution of India thus making its stand clear.

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