Finance Commission Chairman NK Singh on Tuesday emphasized the need to have a conversation between finance commission and the Goods and Service Tax Council (GST) on various concerns related to taxation matter. He further stated that the commission has requested the Finance Minister (who is also the chairman of the GST Council) and has received a positive reply on the proposal.
“One among the various concerns is, how effectively we can engage with the GST to be able to bring its issues in the notice of the constitutional body, what can be done to improve the outcome of the GST, what can be done to improve the quality of compliance also fixation of rate structures,” said MK Singh.
“We have got the positive response from the GST council meeting and that the commission can have a meeting with the GST council on the earliest possible dates,” said the chairman.
According to the finance commission chairman, an effective system for conversation between the finance commission and GST council is something to stress upon. He further said that he had already written a letter to the former finance minister Arun Jaitley stating the need to have a proper mechanism between the finance commission and GST council.
The previous finance minister did not pay heed to the suggestion while the newly formed union finance minister Nirmala Sitharama had taken it into the account and welcomed a meeting between the two entities.
The 15 Finance Commission is on its visit to Karnataka, discussions are held in Karnataka with Chief Minister H.D KumaraSwamy, his cabinet ministers and state government officers. Pointing out to the scenario before GST, Karnataka government said that before GST era, working of VAT presented higher revenue growth, this has somehow hindered after the access of GST.
During the discussion with Karnataka government, KumaraSwamy expressed his worries about base tax rates, which were higher in the VAT era in Karnataka and today because of the reduced GST rates the actual tax collection in Karnataka is adversely affected.
The major concern of the Karnataka Government is the exemption accompanied by the stubbornly fixed rates which are not revenue friendly. Not only for Karnataka, but it is also the topic of worry for the whole country.
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Kumara Swamy said that he requests the finance commission to suggest the Central Government to continue the compensation for another 5 years or at least protect the compensation level of the year 2022, for another 5 years.
Paying attention to the tax flow, member of the finance committee said that, “the direct tax flow is going well but the indirect tax flow is the topic for us to worry about”.
For now, the finance commission is looking forward to having a conversation with the GST council and try to find out the ways to fix the tax mechanism.