New Delhi: As negotiations with states on GST enter a critical stage, the Centre is looking forward to implementation of the new indirect tax regime from April 1, 2016.
"The deadline for actual implementation of GST from April 1, 2016, would be feasible. It all depend on how quickly we are able to reach consensus on critical issues," Revenue Secretary Shakti Kanta Das said at an event here.
The Goods and Services Tax (GST) regime aims at subsuming most of the indirect taxes at the central as well as state level. The UPA government in 2011 introduced a Constitution Amendment Bill in the Lok Sabha to pave the way for introduction of GST.
The GST which has been pending since 2006, is stuck at a crucial stage where states have proposed to keep products such as petroleum, tobacco and alcohol out of GST ambit and had demanded the exemption list be included in the Constitutional Amendment Bill.
As regards the compensation structure, the states have sought a five year compensation mechanism from the Centre and demanded the same be included in the Constitutional Amendment Bill.
"The discussions are at a very critical stage and we hope to make very good progress. We are quite optimistic we will be able to reach convergence in the coming weeks or months," Das added.
He said there are 4-5 issues with the states that are outstanding and on each there have been discussions in recent weeks.
Earlier this week, Prime Minister Narendra Modi held a meeting to take stock of the proposed new indirect tax regime and decided to soon clear the pending CST compensation for revenue loss incurred by states.
"We hope and we are quite optimistic that we will be able to resolve (it) in the coming months, which will enable the government to introduce the constitutional amendments in Parliament," Das said.
The GST rollout has missed several deadlines because of lack of consensus among states over certain crucial issues on the new tax regime.
Das said the Centre has given an alternative formulation to the states against their demand for keeping certain products out of GST.
"States want they (petroleum and petroleum products) should be constitutionally kept out. We are in discussion with the states, we have given an alternative formulation. Discussions are at very critical stage. But we are quite hopeful we will reach a convergence," he said.
Clearance of CST compensation arrears has been a bone of contention between Centre and states, as the states still wait for Rs 13,000 crore arrears pending till 2010.
"The key necessity behind having GST is having a trust between Centre and states... During the course of current year the government is making efforts to find the resources to compensate the states for part of the CST loss," Das said.
CST, a tax imposed on the inter-state movement of goods, was reduced from 4 percent to 3 percent in 2007-08 and further to 2 percent in 2008-09 after the introduction of Value-Added Tax (VAT). The centre had then promised the states that it would bear losses due to reduction of CST.
As part of the roll out of GST, the CST is being phased out and has been reduced to two per cent from the earlier four per cent. The Centre collects CST and distributes it among states.
Das further said the revenue department's key objective is to foster non-adversarial tax administration and towards this has tried to reduce the interface between the tax officials and assessee.
"Number of steps have been taken on non adversarial tax administration. We have had in the recent weeks discussions between the CBDT and CBEC. Very shortly we will be coming out with certain guidelines which is for the department officials to follow to foster a more transparent and a more non- adversarial tax administration," Das said.
While presenting the Budget, Finance Minister Arun Jaitley had expressed hope that the government will be able to "bring a final solution in the course of this year and approve the legislative scheme which enables introduction of GST".
GST, he had said, would streamline tax administration and avoid harassment of business and result in higher tax collection both for Centre and States.
