Government may have to put GST plans on hold

Dated 13th October, 2014

The new government's plan to introduce GST (Goods & Services Tax) may have to be put on hold as the finance ministry wants to compensate states for only three years, according to a media report.

The states have been seeking compensation from the central government for the losses incurred on account of switching to the proposed indirect tax regime for five years, the report further said. The finance ministry has also ruled out making any provision for compensation in the Constitution Amendment Bill; it may be provided for in the GST law, the report added.

The compensation will be given to states on the lines of a formula to be suggested by the 14th Finance Commission, which is likely to give its report later this month.