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mains Test Series 2018
Q. Recent developments in GST: comment on recent developments in GST.
Dec 26, 2016 Related to : GS Paper-3

Ans :

Introduction-

Recently 7th meeting of the Goods and Services Tax Council was held and both centre and states managed to clear the current drafts of the Centre and State GST Bills and agreed on a two-monthly compensation payout to States, instead of a quarterly one, for revenue losses they might incur after the switch. Though both states and centre agreed on many aspects, but still there exists some issues. 

Issues-

  • There is an issue between states and centre on sharing the administrative powers.
  • There is also issue on tax as well powers on inter-state supplies.There is also an issue about compensating states revenue by imposing cess, states want funds to be drawn from other sources as well.
  • Due to some trickiest differences between states and centre, now roll-out of GST from April looks increasingly unlikely.

Analysis-

  • Though centre and states reached agreement on many aspects, but the issues like dual control, compensation drafts of Integrated GST still exist between centre and states.
  • Next GST meeting is critical to enable the GST laws to make it to the Budget session of Parliament. States have mooted a July 1 start for the GST regime, and that date could be pushed as far as September 16, following which all existing indirect taxes will lapse.
  • States also faced some revenue loss due to demonetisation, hence they may harden their stance on GST negotiations if the remonetisation process hasn’t picked up by December 30.
  • There is an urgent need to build consensus on remaining matters of GST. Centre must take states on board and states should avoid unnecessary and irrational demands for national interest.  

Conclusion-

In last seven meeting of GST council it was witnessed many ups and down. Seventh meeting of GST council has brought some hopes on implementation of GST in the coming finance year only. In this background centre and states must build consensus to realise the fruits of mega economic reforms in the form of GST.


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