Civic bodies raise concerns of loss of revenue under GST regime

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The Congress is clear that although it supports GST, since the Manmohan Singh government was its real architect, it would not compromise on any of its conditions

 Representatives of civic bodies, including Brihanmumbai Municipal Corporation (BMC), raised concern that the Constitution amendment Bill on Goods and Services Tax (GST) did not mention compensation to them, despite proposing subsuming of levies imposed by them such as octroi into GST. They met members of the parliamentary select committee on GST on Tuesday.

Although the National Democratic Alliance-ruled Maharashtra government has allayed BMC’s concerns and promised to compensate for its loss, several committee members felt that the legislation needs to explicitly mention revenue protection measures for local bodies so that they are not at the mercy of state governments. The BMC, one of the richest civic bodies, gets 45 per cent of its revenue from octroi.

Again, Goa, a state which is largely dependent on entertainment and tourist revenue which is slated to be subsumed by the GST regime, has urged the committee that the state be allowed to continue to levy some sort of a local tax. Maharashtra, Gujarat and Goa have extended their support for the GST regime.

The 21-member committee, which has concluded its visit to Mumbai, Chennai and Kolkata, met with a wide variety of stakeholders, including state governments.

Some committee members are of the view that protecting the autonomy of local bodies, in urban and rural areas, needs to be factored in the 122nd constitutional amendment Bill itself.

AIADMK-ruled Tamil Nadu, on the other hand, continues to oppose GST, with a state government representative telling the committee members that it amounted to “entering the unknown”.

With the committee preparing to undertaking a clause-by-clause scrutiny of the Bill, the Congress is firm on insisting on the five major concerns: Withdrawal of the imposition of one per cent additional tax needs over GST for manufacturing states, inclusion of tobacco and electricity within the proposed indirect taxation regime, much lower revenue neutral rate for GST at 18 per cent against around 27 per cent, a dispute settlement mechanism and an explicit compensation formula.

The Congress is clear that although it supports GST, since the Manmohan Singh government was its real architect, it would not compromise on any of its conditions.

The committee is expected to submit its report in the upcoming monsoon session of Parliament.

Source: Business Standard

 

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