The Select Committee of the Rajya Sabha has recommended adequate measures to be taken by states to ensure sufficient revenue flow to the local bodies. The Committee noted that state legislatures are constitutionally bound to authorize panchayats and municipalities to collect taxes in the state list. In its report, presented to the Rajya Sabha today, the 21-member Committee felt that apprehensions cast over the introduction of Goods and Services Tax (GST) are the early hiccups and with its introduction, States and Union Territories would have many more options to generate and augment their revenue sources.<br/><br/>However, in their dissenting notes, the AIADMK and the Congress have suggested 100 per cent compensation for a period of not less than five years to the manufacturing states like Tamil Nadu. It said levy of one per cent additional tax will not meet their requirements. Instead, states should be allowed to retain four per cent of CGST part of the IGST on all inter-state sales and transfer of goods and services. The Congress said it is impossible for it to support the GST bill, which is neither simple nor comprehensive. The party said it is pitted with compromises, exclusions and exceptions. It said there is a need to specify a ceiling rate of 18 per cent of GST that do not impose unfair burden on consumers.<br/><br/>The panel also rejected Opposition demand for lowering Centre's say in the GST Council. It said, Centre-State representation to continue at 1/3rd and 2/3rd. The Select Committee said, one per cent additional tax over GST rate will have cascading effect on taxes and suggested change in definition of supply.

The Select Committee of the Rajya Sabha has recommended adequate measures to be taken by states to ensure sufficient revenue flow to the local bodies. The Committee noted that state legislatures are constitutionally bound to authorize panchayats and municipalities to collect taxes in the state list. In its report, presented to the Rajya Sabha today, the 21-member Committee felt that apprehensions cast over the introduction of Goods and Services Tax (GST) are the early hiccups and with its introduction, States and Union Territories would have many more options to generate and augment their revenue sources.<br/><br/>However, in their dissenting notes, the AIADMK and the Congress have suggested 100 per cent compensation for a period of not less than five years to the manufacturing states like Tamil Nadu. It said levy of one per cent additional tax will not meet their requirements. Instead, states should be allowed to retain four per cent of CGST part of the IGST on all inter-state sales and transfer of goods and services. The Congress said it is impossible for it to support the GST bill, which is neither simple nor comprehensive. The party said it is pitted with compromises, exclusions and exceptions. It said there is a need to specify a ceiling rate of 18 per cent of GST that do not impose unfair burden on consumers.