Raghav
Asked March 05, 2014

Goods and Service Tax

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If Goods and Service Tax is implemented, how will it affect the State autonomy?

Answer 1

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Saumya Kumar

GST essentially provides for a uniform tax system across the country where right now the State Government controls many state taxes. Right now the State Governments can manage the rate of the tax the items on which the tax will be levied and the exemption which can be provided depending upon the conditions in the State. The new GST regime will provide the power to the Central Government to determine the items which will be taxed and the rate at which the tax will be levied. The State Governments will not have the option to decide the items taxed and the rate of tax like they do now. It is believed that for some more economically advanced state it will much easier to levy the tax while for some economically weaker state the payment of the uniform tax maybe difficult. The State Governments are not very happy with the transition and have demanded compensation from the Central Government for the loss suffered from the reduction in their income.

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