GST Bill: States Reject Government's Proposals, Will Take up Demands With Jaitley Again

State finance ministers met Arun Jaitley today to push their demand on the Goods and Services Tax or GST.

In a setback to the BJP-led government at the centre, states have blocked a key reform, the Goods and Services Tax or GST, that Finance Minister Arun Jaitley hoped to build consensus on at a crucial meeting today.

"We have made some headway, will meet Union Finance Minister Arun Jaitley again in a week's time," said Empowered Committee chairman after the meeting.

1) The government wants to roll out the GST by April 2016, but finance ministers of state governments today rejected several proposals of the Centre at the meeting in Delhi.

2) The GST is supposed to cut down the large number of taxes imposed by the central government and states, but states are not ready to let petroleum tax be subsumed in GST.

3) They have also rejected the central government's proposal offering three year compensation for any revenue loss on account of switching to the GST.

4) States want compensation for taxes forgone for five years.

5) They also want the government to pay dues towards central sales tax compensation pending from 2010-11 in one go. On Wednesday, Mr Jaitley had announced a proposal to pay Rs 11,000 crore as part payment of dues towards central sales tax compensation pending from 2010-11.

6) Also, there is no consensus on the final GST tax rates yet and recommendations vary from 16 per cent to 27 per cent.

7) The GST roll out has missed several deadlines because of lack of consensus among states over such crucial issues.

8) The GST Constitutional Amendment Bill, which was introduced in the Lok Sabha in 2011, has lapsed and the Modi government will be required to come up with a fresh bill.

9) The government needs to take states on board because the GST Bill requires the consent of 50 per cent of states for implementation.

10) If successful, economists say the implementation of GST could add 2 percentage points to GDP growth.

(With inputs from PTI)