Tamil Nadu chief minister J Jayalalithaa on Monday expressed serious concern over the issue of fiscal autonomy of the state. The proposed GST Council with the functions assigned to it will override the supremacy of the Legislature — both at the Centre and in the states in taxation matters, she said. "This is unacceptable to Tamil Nadu," the chief minister remarked.
In her letter to PM Narendra Modi, which was released to the media on Monday, she said a number of concerns still remain to be addressed. One of these issues was the impact of the proposed Goods and Services Tax (GST) on the fiscal autonomy of states and the huge permanent revenue loss such a taxation system is likely to cause to a manufacturing and net exporting state like Tamil Nadu.
It was happy to note that some of the concerns, the state had raised earlier, were addressed in the latest draft Bill, with the provisions relating to Declared Goods having been removed and alcoholic liquor for human consumption kept outside GST. The provisions relating to advisory committees for dispute resolution have also been deleted, is a welcome step. However, a broad consensus on key and contentious issues such as dual rate bands, taxation threshold, IGST Model, commodities to be excluded from GST, clarity on dual administrative control, compensation period and methodology should be arrived at among the states and with the central government before the enactment of the Constitutional Amendment Bill on GST is taken up, she pointed out.