New Delhi: A day after the government tabled the Goods and Services Tax (GST) Bill in the Lok Sabha, Finance Minister Arun Jaitley on Saturday urged industries to build public opinion in states for passing the law on reforming India's indirect tax system.
"Any state that does not fall in line (with GST), my advice to all stakeholders is go to states to raise the issue, to convince, to pressurise public opinion in all the states," Jaitley said in his address during the 87th annual general meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI) here.
Hinting that complete consensus is awaited on a bill that needs to be passed by a two-thirds majority in both the Houses of Parliament and by the legislatures of half of the states to become a law, the Finance Minister called for "a shared national vision on basic issues".
States sought a five-year compensation package and asked for its inclusion in the bill.
Jaitley introduced the Bill in the Lower House on Friday, saying the objective of the legislation is "the seamless transfer of goods and services across the country".
The bill, which will be taken up for discussion in the Budget Session of Parliament in February, proposes a national sales tax that will replace a myriad of overlapping state duties that deter investment.
While the CST is levied by the central government on inter-state movement of goods and collected by states, the issue of compensation arose because the Central government cut the CST from 4 per cent to 2 per cent in phases, after state-level VAT was introduced from April 1, 2005.
Earlier, Finance Ministers of seven states in a meeting here on Thursday rejected the draft GST Bill, saying it does not address their concerns on the issues of compensation, entry tax and the tax on petroleum products.
The states also want petroleum, alcohol and tobacco to be kept out of the purview of the GST.
By subsuming most indirect taxes levied by the central and state governments such as excise duty, service tax, VAT and sales tax, GST proposes to facilitate a common market across the country, leading to economies of scale and reducing inflation through an efficient supply chain.
The finance minister also said that the decision to dismantle the Planning Commission stemmed from the fact that one size does not fit all.
"The requirements of Manipur and Punjab are different. The intent was to dismantle control and command economy which was imposing the same scheme on all states, irrespective of their level of development," Jaitley said.
"The new arrangement would be a key step towards cooperative federalism and empowerment of states."
Jaitley forecast that 2015 would be a year of challenges: "First crossing the six percent GDP mark, of improving revenues and of delivering on the promise of comfortable lives of the people and then moving on to double digit growth that this country is in dire need of."
Jaitley also commented on the recent industrial output data which indicated negative growth. He said that the negative output was due to the massive decline in the manufacturing sector, specifically the sharp fall in output of telecom equipment.
"This (sharp fall output of telecom equipment) is attributed to a tax dispute which led to closure of a plant in Tamil Nadu," Jaitley said.