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Will Madhya Pradesh be isolated on goods and service tax (GST) issue? If highly placed government sources, working the new tax system, are to be believed, the state government will have to follow the trend. “Eventually the state will have to implement the system, we cannot linger on. Other states like Chhattisgarh have also agreed to implement it, Gujarat government has welcomed it, Haryana has accepted it ‘in principle’ except for few points. How Madhya Pradesh can stand out?” asked an official. But the state finance minister has a long list to point out flaws in the new tax system, the main being, “The GST will bring even dal-chawal (rice and pulses) under tax net, which are exempted from VAT.”
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Finance Minister Raghavji has been opposing the system since his budget presentation this year. He fears the GST will indirectly benefit the MNCs, hitting the poor and MPwill lose Rs 2,000 crore annually if GST is implemented. He has also said until the Centre compensates the losses and removes anomalies, his government will not implement it in the state, which is to be implemented from April next year.
“There are certain issues which need to be addressed, we will lose Rs 700 crore, which we will otherwise get from Central sales tax. There will be two taxes- state GST and central GST; the Centre has to define it. Moreover, it will bring essential commodities under high tax regime,” the official said.
On the other hand, the manufacturers say they will welcome GST only if implemented in a simplified way, “We will be happier if GST ensures that we are to have lesser formalities and documentation,” said Subhash Vithaldas, past office-bearer of Confederation of Indian Industry.
Madhya Pradesh is the first state which protested against the GST. Raghavji and his executives have yet to spell out their demands before the Centre and the public despite their claims of ambiguity in the new system. The new tax system would replace excise duty and service tax at the Centre and VAT and local taxes at the state-level.