CHENNAI: Reiterating her views on amending the Goods and Services Tax Act, Tamil Nadu Chief Minister J Jayalalithaa has urged the Centre to arrive at a broad consensus among all States on key issues like compensation period and methodology, revenue neutral rates, floor rates with bands, commodities to be excluded from GST, IGST Model and clarity on dual administrative control. She said the GST amendment should not affect the fiscal autonomy of the States.
Jayalalithaa wrote a detailed letter to Union Finance Minister Arun Jaitley on the objectionable clauses in the Draft Constitution Amendment Bill on GST. She also wrote separate letters to Chief Ministers of all States. “I do hope you will agree with my views that, before enactment of the Constitutional Amendment Bill on GST is taken up”, she added.
The Chief Minister said an independent compensation mechanism and methodology for revenue losses suffered by the States was an essential prerequisite for implementation of GST. Pointing out that the Centre’s suggestion for including a separate legal provision for compensation, as part of the enabling GST Legislation would not suffice.
“A mere legal provision will not serve the interests of the States. A compensation mechanism should be enshrined in the Constitution itself and it should not be reduced to an instrument of Union policy which may change from time to time”, Jayalalithaa reiterated.
The Chief Minister said the proposal of the Centre to bring petroleum products under the ambit of the Goods and Services Tax was another area of concern which would seriously diminish the limited revenue resources of the States. “The proposed system of dual levy wherein the States will also be empowered to continue the existing levy of tax on the sale of petroleum products in addition to the levy of GST is not acceptable, as a portion of the tax on petroleum products would still be eligible for Input Tax Credit”, she observed.
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