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GST PANEL TO FRAME MODEL GST LAW; 3 COMMITTEES TO ADDRESS ISSUES

SOURCE: ZEE NEWS

New Delhi: State finance ministers on Thursday decided to prepare model legislation and set up three committees to sort out various issues for smooth roll-out of the Goods and Services Tax (GST). "There was a broad consensus ... Three committees were notified today to go into the details ..," the Chairman of Empowered Committee of State Finance Ministers, Sushil Modi, said after the meeting with Union Finance Minister P Chidambaram here. The state finance ministers decided to set up panels to address issues such as Integrated GST (IGST) and VAT on imports. The committees would also consider dual control threshold and exemptions, and revenue neutral rate and place of supply rules, Modi said. "Besides, the Empowered Committee will draft a model legislation, as after the Constitution is amended we require a model bill which has to be passed by every state legislature," Modi said. On providing compensation to states for reducing central sales tax (CST) rate, Modi said that Chidambaram will "make provisions in this budget for providing full compensation for 2010-11". "Out of total 2010-11 compensation, Rs 7,000 crore has already been paid so whatever is remaining Finance Minister will provide in the Budget," he said.

However, there appeared to be differences among states on the issues of autonomy and CST compensation. On whether GST can be rolled out from April 1, 2014, Madhya Pradesh Finance Minister Raghavji said: "I don't think so. Autonomy is the main issue. By Constitution, sales tax has been assigned to the states. Sales tax should be levied by states ... "They (Centre) are not prepared to give 100 percent compensation but states insisted on 100 percent compensation". Gujarat Finance Minister Saurabh Patel said: "Many states asked for full compensation. (Compensation) Issue has not been resolved. It will resolve on February 28 ... When the budget comes .. What is the allocation made in the budget". West Bengal Finance Minister Amit Mitra said: "As far as CST compensation is concerned, it has to be there to a degree that position of states is recognised, and therefore autonomy and compensation, these are the two main issues". Last month, the states had agreed to a lower payment of Rs 34,000 crore for phasing out the Central Sales Tax (CST), a pre-condition for rollout of the GST. According to the resolution at the meeting in Bubaneshwar on CST issue, the Centre would bear 100 percent of the loss accrued to states in 2010-11 fiscal on account of lowering of CST. However, for 2011-12 and 2012-13 fiscal, the Centre would give 75 percent and 50 percent of the losses to states.

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). --------------------------------------------------------------------------------------

Budget 2013-14: GST will open India as single market


Shashi Kiran Shetty Allcargo Logistics

With the government's decisiveness to roll out the much-awaited Goods and Service Tax (GST), we hope that the implementation will eradicate the hurdles by simplifying tax structure. This move will open 'India' as one single market and bring down state level barriers. In the long-term, GST will stimulate the emergence of true "hub-and-spoke" system, with companies setting large hubs in key strategic gateway locations coupled with smaller spoke warehouses nearer to metro/ urban consumption centers. In India, companies still utilize road transportation for majority of the goods movement. The government must accelerate laying and up gradation of freight corridors and highways that will result in faster transportation, lower fuel consumption and wastage. We also hope that the government recognizes that logistics is the backbone of our economy and sets up a regulatory / governing body. We hope that over a period of time the shipping ministry will promote coastal shipping in India by doing away with custom duty for ships which are built and operated in a foreign country, however under the Indian Flag. We also wish that the government of India finally accepts the long pending demand of the industry to abolish the custom duty on coastal ships thereby making it economical for the ships to operate in the Indian coast. As per several representation made, coastal shipping is the most efficient way to transport good, it not only helps to decongest the Indian roads and burn less fuel, it also is cost effective thus helping Indian manufactures become more competitive in their products, helping the consumers and also helping the in managing the inflation.

All the infra projects need to have the environment clearance before sending it for bidding, so that there is complete transparency and visibility for the participating company. Last but not the least, we recommend the abolition of TAMP at the earliest. The JNPT terminal which is the most important port handling well over 60% country's container trade has become extremely congested. It is showing India in poor light due to frequent break down in port operations due to many reasons, a primary one being the TAMP regime. This has demotivated the private terminals to perform to their capacity which has caused tremendous strain on the efficiency of the port making the Indian export far more expensive and delay leading the cancellation of several orders in this extremely difficult situation. There are plenty of suggestions that have been made in the past to initiate the transaction cost, without the authorities intervening on the day to day transactions of the Logistics companies. We definitely wish that the government pays to attention to all the suggestions made to bring about the reforms.

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