Budget 2012: Goods and Service Tax now seems to be 'in limbo', says Sushil Kumar Modi

NEW DELHI: With the Centre not spelling out the time line for implementation of the proposed Goods and Service Tax in the Budget, a disappointed Chairman of the Empowered Committee of State Finance Ministers Sushil Kumar Modi today said he apprehended GST may have gone "in limbo".

He also pointed out that state governments will face a lot of problems as a "mere" Rs 300 crore has been budgeted towards Central Sales Tax (CST) compensation for the next fiscal.

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"It seems GST has gone in limbo. Central government is not serious to implement GST," he told PTI over phone.

Terming the Budget as a big disappointment, Modi charged Union Finance Minister Pranab Mukherjee did not take into account concerns of State governments on Service Tax and CST compensation.

"Not a single concern of States has been taken into cognisance in the Budget. It is very disappointing," he said.

The state governments had demanded 35 services, on which states impose levies, to be kept in the 'negative list' (ie Service Tax should not being levied on them).

Modi said the demand was not taken into considerations and "this will lead to double taxation and litigation".

State governments had also demanded raising the CST rate to four per cent from the current two per cent, which too does not find mention in the Union Budget. While Centre levy CST, States collect the revenue.

The EC will meet here next month to firm up future action plan, Modi added.

A preparatory step towards the implementation of GST was introduced in Parliament in March 2011 and is before the Parliamentary Standing Committee.

"As we await recommendations of the Committee, drafting of model legislation for Centre and State GST in concert with States is under progress," Mukherjee said in the Budget and sought support of all parties for passage of the legislation.