Government will bring back the Direct Tax Code (DTC) Bill to Parliament and it will be re-introduced before the ongoing Budget session comes to an end, while the Goods and Services Tax (GST) regime too would be implemented soon as consensus on contentious issues related to it has been arrived at with States, Advisor to the Finance Minister Parthasarathi Shome gave an indication towards this on Thursday.
He also said that “doors have been opened” on the much delayed rollout of the Goods and Services (GST) regime and after the Finance Minister P Chidambaram’s assurance to the states that they would revisit issues related to Central Sales Tax (CST) compensation, it is now up to the state governments to get back to the Centre on this.
States have long been seeking compensation in lieu of the lost revenue due to the lowering of the CST rates and due to this the GST rollout has been getting delayed.
Shome, who was addressing an interaction with businessmen on the Union Budget under the aegis of industry chamber Assocham, said that Chidambaram has indicated that he would compensate the states and has allocated more than Rs 9,000 crore for this purpose.
“The Finance Minister has given an assurance to the states that he would look into all the related issues (regarding GST rollout and CST compensation). Now the states have to get back to us. The doors are now open and the GST has good probability on the tax horizon today,” he said.
There was also consensus on the contentious issue of CST compensation with states agreeing to accept a lower package of Rs 34,000 crore, he added. The Centre will bear 100 per cent of the loss accrued to states in 2010-11 fiscal on account of lowering CST.
However, for 2011-12 and 2012-13 financial years, the Centre will provide for 75 per cent and 50 per cent of the losses. CST, a tax imposed on the inter-state movement of goods was reduced from 4 per cent to 3 per cent in 2007-08, and further to 2 per cent in 2008-09 after introduction of Value Added tax (VAT).
On DTC, Shome said that the Finance Ministry has received and studied the comments by the Parliamentary Standing Committee on Finance headed by BJP leader Yashwant Sinha.
“The Parliament is heading for a break after March 22, and during this period a lot of work on it would be done. DTC would be brought back during the ongoing Budget session. It has to come out as a real reform measure,” the noted economist said.