New Delhi: Finance minister P Chidambaram is expected to meet Congress leaders to get their budget wishlist on Thursday. The Congress is likely to make a strong pitch for raising the Income Tax exemption limit and increasing allocations for anti-poverty programmes.
Last month in Bhubaneshwar, the Empowered Committee of State Finance Ministers had reached a broad consensus on the design of GST under which the states will be free to decide the time of its introduction. The Empowered Committee also decided to suggest to the Finance Ministry incorporation of provisions for allowing states to opt out of the GST fold, thereby making it optional.
Chidambaram had recently told state finance ministers that he would include a broad outline of the Constitution Amendment Bill on GST in his Budget speech if there was a consensus among states on the issue. After holding discussions with states, sources said, Chidambaram is likely to recommend certain changes in the Goods and Services Tax (GST) Bill to the Parliamentary Standing Committee on Finance.
The Congress is likely to make a strong pitch for raising the Income Tax exemption limit and increasing allocations for anti-poverty programmes.
States had agreed to a lower payment of Rs 34,000 crore for phasing out the Central Sales Tax (CST), a pre-condition for rollout of the GST. According to the resolution at the meeting on CST issue, the Centre would bear 100 per cent of the loss accrued to states in 2010-11 fiscal on account of lowering of CST.
However, for 2011-12 and 2012-13 fiscal, the Centre would give 75 per cent and 50 per cent of the losses to states. CST, a tax imposed on the inter-state movement of goods, was reduced from 4 per cent to 3 per cent in 2007-08 and further to 2 per cent in 2008-09 after the introduction of Value-Added Tax (VAT).
Besides, they had agreed that instead of a single rate for GST there would be a floor rate with a band, giving freedom to states to fix their own rates. The meeting to be held on Thursday also assumes significance as the Finance Minister is in the process of firming up
indirect tax proposals for the Budget and is likely to discuss excise duty and service tax rates in accordance with the roadmap of GST, with the states.
The Union Budget is scheduled to be presented on February 28.
With Additional Inputs from PTI