NEW DELHI: A broad agreement has been reached with the states on key issues regarding the implementation of the unified tax code, the Goods and Services Tax (GST) that is scheduled to be rolled out from April 2016, Minister of State for Finance Jayant Sinha told the Rajya Sabha on Tuesday.
Allaying fears as expressed by certain states earlier, Sinha said the states would be “insulated” from the impact of GST on their revenue and eventually the new tax regime will cover petroleum and petroleum products.
“The tax rate under GST may be nominal or zero rated for the time being. It has been proposed to insulate the revenues of the States from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products,” Sinha said.
According to him, the government has assured states of compensation for any revenue losses incurred by them from the date of introduction of GST for a period of three years.
“There has been a broad agreement on most issues related to GST with the states in the recent months and the GST rollout is scheduled on April 1, 2016,” Sinha said.
The GST will subsume indirect taxes like excise duty and service tax at the Central level and VAT and local levies on the states front.
The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, had lapsed and the NDA government will be required to come up with a fresh Bill.
States have been demanding that petroleum, alcohol and tobacco be kept out of the purview of GST.
The GST rollout has missed several deadlines because of lack of consensus among states over certain crucial issues on the proposed new tax regime.