Hyderabad, July 25: The Centre has agreed to compensate the State fully for any possible loss of revenue due to shifting to Goods and Sales Tax (GST) which would come into force from next year, the Minister for Endowments, Stamps & Registration, Mr Gade Venkata Reddy said here today.
Speaking to mediapersons in his chamber in the Secretariat, Mr Venkata Reddy said that the GST was an ambitious indirect tax reform and its is merger of State taxes — VAT, Sales Tax, Luxury Tax, Entry Tax and Central taxes like Central Excise Duty, additional Excise duty, Service Tax and additional Customs duty. He also disclosed that the Centre would introduce a Constitutional amendment Bill on GST in Parliament during the current monsoon session and would be passed in the winter session after referring it to Select Committee.
Claiming that the introduction of GST will benefit the taxpayer and consumer, the Minister disclosed that presently there was imposing of 24 percent of taxes on good in various forms and it would bring down to 16 to 20 percent with the introduction of GST as GST was a single point tax system.
Reminding that the collection of VAT and some other taxes was around Rs 25,000 crores in the State, Mr Reddy said that the Centre would compensate the equal amount, if there was any loss to the State after introduction of GST. Integrated GST would also come into force simultaneously with the GST for taxation of inter-state movement of goods and services, he said, adding that the IGST would be zero percent. The purpose of IGST was to see that no direct goods transactions take place between the registered dealer in one State and customer in another. The inter-state goods’ transaction would be between the registered dealers only, he added.
Referring to the reduction of Commercial and Sales Tax from four percent to two percent by the Centre, the minister said that the Centre had earlier agreed to compensate the loss on account of CST reduction. For 2007-08, the Centre had compensated 100 percent loss to the State. But, for 2008-10, the Centre has compensated only 68 percent of the loss and asked the State to bear the remaining burden. “We have received Rs 800 crores from the Centre. Following a request by the State government, the Union Finance Minister has agreed to compensate 100 percent loss for the period. The State would get the remaining loss amount of Rs 700 crores”, he added.
Stating that the State was getting Rs 1,000 crores per year from Purchase Tax on food grains, the State government has asked the Centre whether it would compensate the amount or empower the State to levy taxes on food grains. Negotiations would be held with the Centre in this regard, he said, adding that there was need to consider tax exemptions also. He made it clear that the State government would not relax Sales Tax on petrol and diesel.
On the Bayyaram mines, the minister clarified that there were no different opinions among the Cabinet members on the issue. All the ministers would back the decision of the Chief Minister in the matter, he added.
——-NSS