Tamil Nadu sets up GST advisory council on fiscal powers of state, Centre

Tamil Nadu sets up GST advisory council on fiscal powers of state, Centre

The Tamil Nadu government has set up an advisory council on the fiscal powers of the state and the Centre with special reference to the goods and services tax (GST), a move that has triggered the fear of fissures between the Centre and states if others follow suit.

Many of its terms of reference may undermine the GST Council, say experts. For instance, the council, chaired by senior advocate Arvind P Datar, has also been tasked to identify the problems with the institutional mechanisms that support GST, which include the independence of decision makers and constitution of the GST Tribunal.

The body would also identify difficulties with respect to GST rates applied to various commodities, according to a government order released recently. The council has been asked to suggest strategies to improve GST collections and other taxes of the state. It would also study the best practices adopted in other states with respect to GST, including the use of technology and artificial intelligence to identify tax evasion.

One of the terms of reference says the body would study the levy of cesses and surcharges by the Centre and its impact on the state's finances.

An expert said the fact that one state is constituting a committee on various aspects of GST means that fissures between the state and the Centre in GST are now increasing. “GST reforms are done by the GST Council and groups of ministers appointed. Here we are seeing a state appointing a team to get into what should be done,” he said. Another expert said that if other states follow suit, it is going to become difficult for the GST Council to decide on the next stage of reforms.