States back Centre's plan for July rollout of one nation one tax

Few could have imagined that Srinagar would be the host city for the crucial meeting of the GST Council. And even fewer realise the significance of the moment: It is creating unprecedented history.

As a venue, given the state of near conflict the city finds itself in thanks to sponsored cross-border terrorism from Pakistan, Srinagar is an unlikely choice. Consequently, it has provided all stakeholders, who believe in a different future for Kashmir, to rewrite the negative narrative of the state.

Finance Minister of Jammu and Kashmir Haseeb Drabu thinks so, though he sees the impulses working out differently.

I don’t think this will change the narrative. But what it does (is), it also brings a different perspective to the city and state. There is obviously a huge amount of conflict here, there is no denying that. But there are other things as well. It is a much more layered reality; a much more complex reality. I would call it the Rashmonian reality of Kashmirthere are lots of layers to it, lots of angles to it. And somehow the media only focuses on one aspect, he said in an interview to a business daily.

Drabu is right. Day in and day out all we get to see on Kashmir are stone pelters or encounters with terrorists exported from Pakistan.

The media forgets that yes while there is conflict, the state does have a life. And now Kashmir is at the centre of one of the most high-profile reform efforts: GST.

The moment also captures the significance of the new federal polity promoted by the BJP-led NDA. I personally feel that we are in transition from a coercive federalism to a cooperative federalism en route to competitive federalism. That is where ultimately a lot of political issues will get resolved, said Drabu.

At the meeting,Mamata Banerjee’s West Bengal was isolated — in the face of an otherwise universal support to the country’s most radical tax reform so far — on the question of an elastic deadline for rolling out GST.

The two-day meet has been convened to work out product-specific rateswhiledeciding on slabs for service tax. Most issues, in view of theoverwhelming support from most states, are expected to be ironed outat this meeting of the GST Council, which is the highestdecision-making body for the implementation of the new tax.

On day one of the meeting, West Bengal Finance Minister Amit Mitra stoodout like a sore thumb in the meet, where most states — cutting acrossparty lines — assured Finance Minister Arun Jaitley that they wereworking on rolling out the GST from July. Mitra, however, told thegathering that businesses in his state were not ready for a transitionand that pushing it through at this juncture could adversely impactthe economy and state finances.

While the Centre is determined to work towards theJuly 1deadline,Mitra himself refused to recommend a date by which West Bengal would be comfortable rolling out the GST. The outer limit for the rollout ofthe country’s biggest tax reform is mid-September, going by theone year window provided by the relevant Constitutional amendment.

Giventhat, there weresome suggestions that perhaps it would be a betteridea to implement the GST from September instead ofJuly 1. None,though, were in sync with Mitra’s own open ended suggestion to delaythe rollout of the GST until such time as businesses in his statefound themselves ready for the landmark move.

Interestingly, for all the bitter relations between the AAP and theruling BJP back in the nation’s Capital, even Delhi deputy ChiefMinister Manish Sisodia showed willingness to launch the GST by July1, as desired by the Centre. However, he urged the Centre to come upwith a clearer definition of service where it is delivered. Thecurrent definition, it was felt, was vague.

Kerala Finance Minister Thomas Isaac said most issues had byand large been ironed out. It’s only a question of details, now andit is almost decided that we will work towards theJuly 1GST rolloutdeadline. However, we need to ensure that the exercise isrevenue-neutral and not impact customers, he said.

Among the key issues that were being battled out among states on dayone of the meet was the minimum levy that had to be imposed on gold.Kerala has demanded a minimum levy of 5 pc on gold. Gold is luxury,not a necessity. In the last one decade, price has quadrupled andnobody had any problem. So, what is the big trouble with a 5% tax,Isaac said, justifying his position.

States including Tamil Nadu and Maharashtra, however, do not see eyeto eye with Kerala and are keen on a one per cent tax on the precious metal that many across the country still buy, not just as a luxury item, butas a crucial investment instrument.