New Delhi: Arun Jaitley, the Union Finance Minister, said that Goods and Services Tax (GST) will benefit most of the States from day one especially the consumer States.
He said that to remove any apprehension among the States about the fall in their revenue collections, provisions have been made in the Constitution Amendment Bill on GST introduced by him in the Lok Sabha on the last Friday to ensure that none of them lose any revenue after the implementation of the GST.
In this regard he mentioned that it is proposed to levy a non-vatable additional tax of not more than 1% on supply of goods in the course of inter-State trade or commerce. The Finance Minister said that as the volume of trade expands and the growth momentum picks-up, then every State will be benefitted with the rise in their revenue collections with the implementation of GST.
The Finance Minister said that this tax will be for a period not exceeding 2 years, or further such period as recommended by the GST Council. This additional tax on supply of goods shall be assigned to the States from where such supplies originate.
He further said that the States have been ensured that there will be no revenue loss and the centre will compensate States for any loss of revenue arising on account of implementation of the GST for a period up to five years. He said that a provision in this regard has been made in the Constitution Amendment Bill.
Conforming that the compensation will be on a tapering basis i.e., 100% for first three years, 75% in the fourth year and 50% in the fifth year.
Finance Minister Jaitley said that GST will help in reducing tax on tax and therefore, will be beneficial to the consumers. Besides it, GST will also be beneficial to the Centre, States and industrialists, manufacturers, common man and the country at large since it will being more transparency, better compliance, increase in GDP growth and the revenue collections of both States and the Centre.
He said that the Government is open for any suggestion for making further improvement(s) in the GST Constitutional Amendment Bill introduced by him in the current Session of Parliament. He said that GST is a continuing process which would further evolve and improve with time.
He said that the Government is in favour of strengthening the cooperative federalism in the country and will make all out efforts to evolve as much consensus as possible in implementing GST.