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Tamil Nadu government may seek overhaul of GST council

  • 11 Aug 2021
  • Garima
  • 379

Against the backdrop of continuous shortfalls in GST collections and its reimbursement to the state, coupled with a stand that the One Nation One Tax snatched away state’s autonomy, the Tamil Nadu government hinted at changes after June 2022, when the Centre will stop compensating the state government for shortages in tax collections.

When the GST kicked in in 2017, the Centre promised to compensate states that faced a shortfall in tax collections for five years. The dues for TN as of March 2021 were Rs 20,033.02 crore, the white paper released on Monday showed.

The GST council and tax structure have been at the forefront of tax debates between the DMK government and the Centre as the state maintains its autonomy in tax collections has been usurped by the Centre.

The white paper read: “The lack of buoyancy in GST revenue is a cause for serious concern and this is a major factor on which the fiscal health of the states, Tamil Nadu in particular, would hinge on after June 30, 2022. Hence, the GST structure and its alternatives would dominate the discourse on Centre-State fiscal relations from next year.” The paper was also critical of the Centre’s levies on automotive fuels. It said, “A particularly egregious instance has been the major change in the tax structure on petroleum products effected by the Government of India.” It added: “The Union government has received substantial additional revenue from levies on petrol and diesel, the share of the state governments through devolution of Union excise duty was also brought down substantially.”

TN finance minister P T R Palanivel Thiaga Rajan was vocal in his first meeting at the GST council in May, where he called for reforms of the council, saying it was becoming a “ceremonial seal” and a “rubber-stamp authority”. In an earlier interview, the minister said the present GST system had fundamental flaws, besides opposing the way taxes were collected and distributed, terming them “problematic”.

Source- https://timesofindia.indiatimes.com/city/chennai/tamil-nadu-government-may-seek-overhaul-of-gst-council/articleshow/85198456.cms

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