GST: No consensus among states yet, Centre concerned

Mukherjee said Centre would provide full compensation, to the tune of Rs 14,000 crore, to states to make up for lossessuffered by them on account of reduction in CST rate.

"...the Centre has accepted the request of states forpayment of compensation for the financial year 2010-11... Ihad proposed to make payment on account and on ad hoc basis tosuch states pending finalisation of guidelines," he said.

Yesterday, the government had approved Rs 7,029 crorecompensation to states for CST loss in 2010-11. Of this Rs3,000 crore is likely to be released this fiscal.

Speaking after the meeting, Dasgupta said: "He(Mukherjee) said he would compensate for the CST loss ofstates... To begin with it would be an hoc relief to befollowed by subsequent measures."

Asked about the likely size of the compensation, he saidit would be around Rs 14,000 crore.

Regarding the draft, he said states continued to havetheir own views.

The government had originally planned to roll out GSTfrom April 1 last year but a consensus could not be built onintroduction of the constitutional amendment Bill which isrequired to be passed by two-third majority in both the Housesof Parliament.

The GST would subsume most of the central and state taxeslike excise and sales tax, making life easier for the industryand other tax payers.

The proposed GST, which will change India''s fiscallandscape, however, has faced several roadblocks as statesapprehended that their autonomy would be compromised.

There have been disagreements on issues like constitutionof the GST Council, which will govern the tax regime, and onthe powers to be conferred on the central government and theUnion Finance Minister.

Once the proposed Goods and Services Tax (GST) is rolledout, other existing indirect taxes, including the CST, wouldbe subsumed into it.

CST, a tax on movement of goods from one state toanother, was reduced from 4 per cent to 3 per cent in 2007-08and further to 2 per cent in 2008-09 after the introduction ofVAT, as it was considered distortionary.