Cong explores new ways to garner funds

Shyam Sundar Vattam | NT

Bengaluru: There are reports that the Congress Government in Karnataka is planning to recommend changes to the GST Act to expand the tax base and mop up resources for the implementation of the five guarantee schemes which will cost around Rs 60,000 crore annually to the state treasury. In the post-GST era, states have limited scope to levy any fresh tax on goods and services since everything is decided by the Government of India.

But it seems there is a provision for the states to levy taxes on some commodities or hike the existing SGST to pool resources. With no help forthcoming from the Centre for the implementation of the guarantee schemes, the Siddaramaiah government is forced to explore new avenues to pool resources for the implementation of the freebies.

Of the five schemes, the government has so far implemented only the free bus ride scheme. This has forced the government to impose conditions to filter the beneficiaries as much as possible in order to save money.

The launch dates have been postponed citing technical glitches and for want of collection of details. On Friday, Law & Parliamentary Affairs Minister H.K.Patil chaired a meeting on the GST changes to broaden the tax base for mobilization of resources. It is not known whether state governments have the power to amend the Central Government Act to suit its requirements.

Reacting to the GST Amendment meeting, former Law & Parliamentary Affairs Minister J.C.Madhuswamy said the incumbent government cannot amend the GST Act but can take a proposal to the GST Council for inclusion of certain goods and services under the Act to mobilize resources.

All these months, Basavaraj Bommai was the chairman of the GST Council consisting of seven states, and now that post would be occupied by incumbent CM Siddaramaiah. The state government can levy cess on petrol/diesel (not on LPG) because they have been kept outside the purview of GST. Octroi could be reintroduced or the guidance value could be hiked.