Too Many Products Can't be Kept Out of GST: Arun Jaitley

The centre on Saturday asserted that too many products cannot be kept out of the ambit of Goods and Services Tax (GST) even as states are clamouring for more products including liquor, tobacco and petroleum to be excluded.

"The Empowered Committee has with regard to certain items expressed an opinion that they be kept out. Now too many items cannot be kept out because the larger object itself could get defeated," Finance Minister Arun Jaitley told reporters here.

"This is the issue on which we are in discussion with some of the states," he said.

The state FMs are also in the process of harmonising the exemption lists of states and the centre which have 96 and 243 items, respectively.

The GST will subsume indirect taxes like excise duty and service tax at the central level and VAT on the states front, besides local levies.

Different states have different concern on GST. While Madhya Pradesh has a different issue, Punjab has an issue with regard to mandi tax. Besides, Gujarat has raised the matter with regard to some other tax.

"I discussed with the Finance Minister and Chief Minister of West Bengal. I discussed with Finance Minister of Gujarat and with one or two other states which have issues in mind, I do intend to discuss with them (again)," he said.

"I am individually discussing with CMs and FMs (of states) which has raised some issues with regard to GST. An early development of constitutional framework is top in the government's agenda," he said.

The rollout of new indirect tax regime has missed several deadlines because of lack of consensus among states over certain crucial issues on the new tax regime.

The Finance Minister expressed hope that the government will be able to move towards some kind of a larger consensus on the legislation.

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

Earlier Mr Jaitley had said that the government will try to bring in the new GST Bill in the winter session of Parliament.

On the Central Sales Tax issue, Mr Jaitley said the states unanimously expect that CST compensation must be paid to them.

"The same has not been provided for. We are also clear that we will have to start the process of paying them CST compensation....I am conscious that we will try and take some steps as soon as our affordability itself increase," he said.

CST, a tax imposed on the inter-state movement of goods, was reduced from 4 per cent to 3 per cent in 2007-08 and further to 2 per cent in 2008-09 after the introduction of Value-Added Tax (VAT). The centre had then promised to the states that it would bear their losses due to reduction of CST.

As per the compensation mechanism, the centre would bear 100 per cent 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 per cent and 50 per cent of the losses, respectively, to the states.