Union Finance Minister Arun Jaitley has written to Chief Minister Shivraj Singh Chouhan that the interests of the States will be fully taken care of while finalising the Goods and Services Tax (GST) structure.
Jaitley has written this letter in reply to Chouhan’s letter to him expressing concerns of the state following introduction of GST. The Union Finance Minister has assured that the Central Government would make all efforts to bring on board all State Governments in adopting GST by addressing their concerns.
Jaitley informed in the letter that since in the revised draft the powers of the GST Council has been proposed to be recommendatory in nature it would not take away the legislative autonomy of the State legislatures. The Central government is working on a formula for arriving at a Revenue Neutral Rate (RNR) which obviates any revenue loss to any state. In addition, in the revised draft states have been empowered to levy additional 2-3 per cent of tax by way of band above the floor rates.
This will suitably compensate States’ revenue loss, if any, due to RNR. The Centre is also committed to compensate the states in case of loss of revenue, he added.
Jaitley further informed that the Central Government has already set up a SPV namely GST Network to provide a strong IT infrastructure and service backbone in respect of inter-state trade of goods and services. The GST Network will fully take care of timely transfer of funds to the importing states in respect of taxation of inter-state supply of goods and services.
The Empowered Committee has already constituted a committee to draft the Place of Supply Rules and that committee is likely to submit its report shortly. The Empowered Committee has also constituted a committee to look into issues relating to dual controls, exemption etc.