Source: News Bharati English17 Jun 2016 15:01:33

Kolkata, June 17: While speaking at the Empowered Committee of State Finance Ministers on the proposed nationwide common indirect tax, Chief Minister of Arunachal Pradesh Kalikho Pul, welcoming the Goods and Services Tax (GST), has called for provision of exemption and flexibility in the GST Laws, especially for states like Arunachal Pradesh.

“Such exemptions are needed to empower those small states, which are lagging behind in development front, to assess and create state-specific tariff and exemptions that will address the issues of the developmental gap,” said Pul. Informing on various tax exemption structures for Arunachal Pradesh, the Chief Minister said that 99% VAT exemption,which has been given as an industrial incentive, is must to promote and protect the state’s emerging manufacturing sector.
Pul, who also holds the Finance Department, expressed concern over entry tax in Arunachal to be subsumed under the present form of GST Law, which would mean a huge revenue loss to the state government. “In Arunachal, entry tax is not an additional tax; rather input tax credit (ITC) is given to the dealer to the extent of entry tax paid while filing VAT returns,” said the Chief Minister.

“It is a kind of advance VAT paid by every dealer and 80% of revenue collection in our State comes from entry tax,” he said. He further said that the existing entry tax collection centres at border check gates on Assam-Arunachal border be allowed to be converted as focal points for collection of advance GST as well as a centre for GST administration, news agency The Arunachal Times reported.

In view of poor service sector in Arunachal with very less contribution to the tax base, the Chief Minister said that Revenue Neutral Rates (RNR) as proposed, will adversely affect the revenue generation in the state. Pul also urged the central government to extend the tenure of revenue compensation to 10 years considering that Arunachal Pradesh is a Special Category State.

In view of the poor IT infrastructure and connectivity, the Chief Minister said that filing of e-returns will be a difficult provision to implement on the ground. He sought the Centre’s intervention in creating a robust IT infrastructure in Arunachal Pradesh to develop capacity for full compliance of the GST.

Calling for exemption in provision of PAN-based registration, the Chief Minister said that the state of Arunachal Pradesh is predominantly a tribal state whose residents are exempted from income tax and by extension, the provision of Permanent Account Number (PAN) does not apply to the State.

The meeting was attended by Finance Ministers of 22 states, including West Bengal’s Amit Mitra, Chief Minister of Meghalaya, Deputy CM of Delhi and senior officials of seven others. Finance Minister Arun Jaitley said virtually all states, barring the south Indian state of Tamil Nadu, have come on board on the long-pending GTS bill and expressed hopes of pushing the legislation in the upcoming monsoon session. Jaitley also said the states’ fear of any revenue loss in the first five years has been addressed and the Centre would compensate for these losses.