Finance Minister Arun Jaitley said that States would be compensated on account of CST and the first installment would be made before March 31, 2015.
The much-awaited Goods and Services Tax (GST) Bill, which provides for an overhaul of the taxation system, was introduced in the Lok Sabha on Friday with the government saying concerns of all the States have been taken care of and they would benefit from the win-win measure.
Finance Minister Arun Jaitley said the Constitution (122nd Amendment) Bill will be taken up in the Budget Session of Parliament and that he will be open to all suggestions till the very last minute.
Introducing the contentious GST Bill, which was cleared by the Cabinet on Wednesday (December 17), Jaitley said, "We have made sure that no State will lose a rupee of revenue. It will be a win-win situation."
The Finance Minister said that States would be compensated on account of CST (Central Sales Tax) and the first installment would be made before March 31 2015.
Seeking to allay apprehensions of States, Jaitley, who spoke on the Bill in the Rajya Sabha earlier on Friday, said their interests were more than adequately protected and the minister did not foresee a situation where States would be the losers.
Besides local levies, the GST will subsume major indirect taxes like excise duty and service tax on the central level and value added tax (VAT) on the States front.
There are differences between the Centre and States on some issues with regard to the implementation of GST, including those of the revenue neutral rate and keeping petroleum, liquor out of the ambit of the new tax regime.
Jaitley said the government would give constitutional assurance in terms of compensating the possible losses incurred by states.
GST reform would strengthen the principle of co-operative federalism as Centre and State would need to work together to take decisions which would require 75 per cent majority approval, the Finance Minister said.
As some members questioned the hurry and wanted the crucial legislation to be sent to the Standing Committee, Jaitley contended that the government's intention was not to push or rush the Bill through.
"Let there be no tax on tax. If you have multiple taxation imposed, the burden and procedural complication increase. One legitimate fear is there and therefore I am not going to rush through with this, though the Standing committee has cleared it and I have discussed it repeatedly and Mr Chidambaram has discussed it repeatedly," the Finance Minister said.
Jaitley said that whether a standing committee was again required or not required was a separate issue. "But we want this to be debated after it is introduced so that if anybody has suggestions to offer and I will accept that," he added.
The objective behind the GST is to ensure there is a seamless transfer of goods and services across the country, he said about the Bill, which intends to remove the cascading effect of taxes and provide for a common national market for goods and services.
Under the proposed Act, a GST Council will be created to look into issues relating to GST tax. It will cover all goods and services, except alcoholic liquor for human consumption.
In case of petroleum and petroleum products, it has been provided that these goods shall not be subject to the levy under GST till a date notified on the recommendation of the GST Council.
The GST Constitution Amendment Bill, which was introduced in the Lok Sabha in 2011, had lapsed and the Modi-led NDA government has come up with a fresh Bill.
"I do not intend to pass it (GST Bill) in the current Parliament session. We will formally take it up in the next session," the Finance Minister said in the Rajya Sabha, while speaking on the Appropriation (No 4) Bill, 2014.
Describing the GST reform as a win-win situation for both the Centre and the states, the Finance Minister said the Bill would not have fear of the unknown unlike VAT as the Centre had provided cushioning to account for any possible losses they may incur.
Jaitley said that near consensus on the Bill was reached last week and the government cleared all the concerns of the State governments by incorporating several safeguards.
"Some states wanted change in language to give more liberal rights to them. I accommodated that also," the Finance Minister said.