ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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GST and Autonomy of States

Greater clarity, as also, respect for state authority are required on the goods and services tax.

It is now almost certain that the goods and services tax (GST) will not be introduced on 1 April and will have to be delayed.

The last meeting of the Empowered Committee of State Finance Ministers in early January could not reach a consensus on what the revenue neutral rate (RNR) of a GST should be (the rate which would leave the states with at least the same level of tax revenue as at present). Besides, a lot more clarity is required on the proposed design of the GST with a number of issues yet to be settled. Which taxes will be subsumed under the new tax? What will be the compensation mechanism if there is a revenue loss to the states? What will be the nature of the constitutional amendments required to introduce the tax and will they also protect the fiscal autonomy of the states? What could be the acceptable rate of GST for both the centre and the states? Should the states have two rates as in the case of the value added tax (VAT) or only a single GST rate?

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