States may give consent to introduction of GST by centre

Mumbai: State governments have given their in-principle approval to a proposed national goods and service tax (GST), the Mint newspaper reported on Tuesday, raising hopes that the ambitious tax reform could be included in the upcoming budget next month.

Finance ministers from different states agreed to the central government’s GST proposal, but specified a list of services, such as luxury and entertainment, that would remain taxed at the state level.

“We have in principle agreed to tax services based on a negative list,” Sushil Modi, deputy chief minister and chairman of the empowered committee of state finance ministers was quoted by the Mint newspaper as saying.

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The GST will cut business costs and boost government tax revenue, but has missed several deadlines for implementation due to resistance from states that fear a loss of fiscal autonomy and the main opposition Bharatiya Janata Party.

The states’ approval comes over two years after the committee first raised its objections to the tax.

The GST bill, which was introduced in parliament last March, needs the approval of two-thirds of parliament and half of the country’s 28 states to become law.

Reuters