Exclusive: Compensate states, don’t add tax in GST, says Kamal Nath

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Congress leader Kamal Nath on Friday explained his party’ position on the Goods and Services Tax Bill that is waiting to be passed in the Parliament.

Congress leader Kamal Nath on Friday explained his party’ position on the Goods and Services Tax Bill that is waiting to be passed in the Parliament.

“The GST Bill is the most important structural transformation of our indirect tax system. GST is a consumption tax and not a production tax. The 1 per cent interstate tax negates the Constitutional objective, as per Article 301, the free movement of goods and services across India. Secondly, if it is 1 per cent across one state, then it becomes 3 per cent across three states. Why are we having it at all? Compensate for loss, but don’t add tax for ways to make up,” said the former industry and Commerce Minister.

1. There should be no taxation on interstate sales. Congress wants the 1 per cent interstate entry tax to be abolished because it can have a cascading effect on inflation.

2. GST rate should be capped at 18 per cent

3. Tax dispute to be resolved through a  mechanism

Government’s response to the 3 demands

1. Tax to reimburse high producing states

2. Will be difficult to alter the rate in future

3. Not clear on the particular mechanism

“A fair GST should have a cap. In the Constitution. So that it cannot be just done by a simple majority. If some bigger states gang up against the smaller states, you will be able to muster up a simple majority. But this is a national GST, and we have to carry all our states on board. Constitutional amendment will give it a flavour of consensus across the state,” said Kamal Nath reaffirming the Congress demand.

http://indiatoday.intoday.in/story/compensate-states-dont-add-tax-in-gst-says-kamal-nath/1/539224.html

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