One of the terms of reference says the body would study
the levy of cesses and surcharges by the Centre and its
impact on the state's finances
An expert said the fact that one state is constituting a
committee on various aspects of GST means that fissures
between the state and the Centre in GST are now
increasing. “GST reforms are done by the GST Council and
groups of ministers appointed. Here we are seeing a
state appointing a team to get into what should be
done,” he said. Another expert said that if other states
follow suit, it is going to become difficult for the GST
Council to decide on the next stage of reforms.
“During the VAT regime, this used to happen as VAT laws
were different in each state. They were pulling in
different directions. After GST came, there was some
unanimity since the Council has both the Centre and the
states. Now, if each state starts making its own team
and its own recommendations, it is going to become very
difficult for GST from a policy point of view,” he said.
M S Mani, partner at Deloitte, said it was necessary to
evaluate the changes required for the next half of the
decade. “The involvement of external experts having
domain expertise in GST and key industry stakeholders
would enrich the recommendations for the next stage of
GST reforms,” he said. Other members of the advisory
council include Suresh Raman, vice-president and region
head, TCS-services sector.
The decisions in the GST Council are usually taken
unanimously, barring a few instances. However, there
have been instances of tussle between the Centre and the
states, particularly relating to borrowing from the
markets for meeting losses incurred during the Covid-19
The Centre is yet to release Rs 53,489 crore to the
states for 2021-22, according to a written reply by
minister of state for finance Pankaj Chaudhary in the
Lok Sabha on Monday. So far as cesses and surcharges are
concerned, states have been accusing the Centre of
increasingly resorting to imposing them to deprive the
states of their genuine transfers.
The Centre is bound to transfer 41 per cent of central
taxes to the states, but cesses and surcharges are not
part of this devolution.
The Centre transferred 29.35 per cent of total tax
receipts, including cesses and surcharges, during
2020-21. This was projected to increase slightly to
29.60 per cent during 2021-22 in the Revised Estimates
and 29.61 per cent during 2022-23 in the Budget
Estimates of the latest Budget.
Source:::BUSINESS STANDARD ,