FM for GST Compensation Fund

The Punjab government has suggested to the Union government to create a Goods and Services Tax (GST) Compensation Fund, under the administrative control of the GST Council, to provide for a built-in permanent compensation mechanism with a view to address the legitimate revenue concerns of the states.

A suggestion to this effect was given by Finance Minister Parminder Singh Dhindsa before the Empowered Committee of the state Finance Ministers, that deliberated on the revised draft of the Constitutional Amendment Bill for introduction of the new indirect tax regime, among other things.

Strongly demanding the immediate release of heavy dues of the state on account of reduction in Central Sales Tax (CST) from 4 to 3 per cent in 2007-08, and further to 2 per cent in 2008-09 after the introduction of Value Added Tax (VAT), Dhindsa opposed the inclusion of petroleum products and liquor in the proposed GST regime, arguing that the move would severely affect the revenues of the states, which are keen to retain their power to tax these items as they are major sources of revenue.

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Via FM for GST Compensation Fund.

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