CHENNAI: Pressuring the Centre to arrive at a broad consensus on the Goods and Services Tax (GST) Act, Chief Minister J Jayalalithaa has urged the Centre to address key issues such as compensation period and methodology, revenue neutral rates, floor rates with bands and commodities to be excluded from GST and Integrated GST models.
Asking for clarification on the dual administrative control, Jayalalithaa said the GST amendment should not affect the fiscal autonomy of states.
The Chief Minister wrote a detailed letter to Union Finance Minister Arun Jaitley on Wednesday on the objectionable clauses in the Draft Constitution Amendment Bill on GST. She also wrote separate letters to her counterparts in other states.
“I do hope you will agree with my view that before enactment of the Constitutional Amendment Bill on GST is taken up, the Centre should strive for a broad consensus on important issues in this regard,” she said.
Pointing out that an independent compensation mechanism and methodology for revenue losses suffered by the states was an essential prerequisite for implementation of GST, the Chief Minister observed that the Centre’s suggestion for including a separate legal provision for compensation 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 said.
She added that the Centre’s proposal to bring petroleum products under the GST ambit 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 Goods and Services Tax is not acceptable, as a portion of the tax on petroleum products would still be eligible for Input Tax Credit,” the Chief Minister observed.