An agreement has been achieved with the states on most issues concerning the implementation of Goods and Services Tax (GST), which is scheduled to be rolled out from April 1, 2016, according to minister of state for finance Jayant Sinha.
Initially states will be 'insulated' from impact of GST—which will replace all indirect taxes like excise duty and service tax at the central level and VAT and local levies on the states level—on revenues, Sinha said.
"The tax rate under GST may be nominal or zero-rated for the time being in order to insulate the revenues of the states from the impact of GST, with the expectation that in due course, GST will be levied on petroleum and petroleum products," Sinha said in a written reply to Rajya Sabha on Tuesday.
States have been demanding that petroleum, alcohol and tobacco be kept out of GST.
Sinha said government has assured states of compensation for any revenue losses incurred by them from the date of introduction of GST, for three years. "There has been a broad agreement on most issues related to GST with the states in the recent months and the GST rollout is scheduled on April 1, 2016," Sinha said.
The rollout of GST has missed several deadlines due to lack of consensus among states over certain crucial issues on the proposed new tax regime.
The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, had lapsed and the NDA government will be required to come up with a fresh bill.
(Edited by Joby Puthuparampil Johnson)
