Haryana Finance Minister Capt. Abhimanyu and Punjab Finance, Minister Mr Parminder Singh discussing during in the meeting of the Empowered Committee of the State Finance Ministers, in New Delhi on June 4, 2015.
New Delhi, June 4, 2015: Haryana government today lauded that Empowered Committee of Finance Ministers of States and Central Government are collaborating to bring about the Goods and Services Tax (GST), which is a path-breaking reform in direct taxation so as to have seamless and uniform tax structure. However, Haryana urged the Central Government that purchase tax/VAT on foodgrains should not be subsumed under the GST.
Haryana Finance Minister Capt. Abhimanyu, who was speaking in the meeting of the Empowered Committee of State Finance Ministers in New Delhi today, said that at present Haryana is levying VAT/Purchase tax on food-grains and collecting revenue to the tune of around Rs. 1000 crore per annum. However, under the GST regime, it has been proposed that foodgrains shall be exempted from levy of tax. He said that Haryana has given subsidy on electricity to the farmers to the tune of about Rs. 5600 crore during the year 2014-15. It is also providing highly subsidized water for irrigation and elaborate infrastructure for marketing of agriculture produce has been set up at enormous cost over the last several decades, which is responsible for Haryana becoming a food surplus State. He pointed out that if now no revenue is generated out of its surplus agriculture production, it will not be possible for the State to sustain this infrastructure. In fact without this the entire agriculture sector may suffer serious setback. Therefore, the consistent stand of the State has been that either the food-grains should be kept out of the purview of GST or the State be compensated on a permanent basis for the revenue loss incurred by it on account of this tax.
He said that the revenue loss for Haryana due to subsumation of VAT on foodgrains would be both continuous and permanent in nature and hence compensatory mechanism for five years would be inadequate. Considering the nature of losses and the likely permanent impact on the revenue of the foodgrain producing States, the Government of Haryana has already proposed to the Union Finance Ministry that a new entry may be included in the LIST II-STATE LIST in the 7th schedule to the Constitution of India, which would provide taxation powers to these States which follows, “Taxes on foodgrains contributed by State to National Food grains Pool subject to any limitations imposed by Parliament by law." He said that this formulation would enable the food-grain producing States to levy tax on foodgrains and to sustain their contribution to National Foodgrains Pool, provide adequate support to farmers and also protect their revenues on a permanent basis without distorting the GST structure.
With a view to ensure smooth implementation of proposed GST regime in the country, the Minister suggested that there should be guidelines regarding roadmap which should be issued timely. Training and seminars should be organised for departmental officials and for stakeholders by the Union Finance Ministry at the earliest.
Capt. Abhimanyu said that Haryana government is of the view that the States should also be given power to levy additional tax on the Supply of Services in the course of inter-State trade or Commerce. He said that the contribution of the service sector to the economy of our State has increased by manifold. At present no revenue accrues to the state from levy of service tax which falls in the domain of Central Government. In the proposed GST regime, states should be enabled to levy service tax on the supply of services. A provision to levy additional tax on supply of goods in the course of inter-State trade or commerce has been proposed in Clause 18 of the 122nd Constitution Amendment Bill, 2014 introduced in the Parliament. He said that the Haryana proposes that the states may also be authorized to levy additional tax on the supply of services in the course of inter-State trade or commerce in addition to the supply of goods.
Mr Roshan Lal, Addl. Chief Secretary Excise and Taxation Department Haryana is also present on the occasion. / (SK Vyas, Jalandhar)