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States await nod for foreign trips as PM tightens grip over FinMin

Vrishti Beniwal/New Delhi 24 Jul 12 | 12:14 AM

A 50-member delegation led by state finance ministers is on tenterhooks waiting for a confirmation from the Centre about its proposed study tour to Canada and Japan. Prime Minister Manmohan Singh seems to be sitting on the proposal, while requests continue to flow in from states to add more names to the delegation.

The 15-day foreign trip by the empowered committee to study the Goods and Services Tax (GST) is not likely to pass the muster of the Prime Minister’s Office (PMO) without some tough questions being asked, especially in the time of austerity. The tour is just one of the many issues that have caught the eye of Prime Minister Manmohan Singh since he took charge of the finance portfolio in June-end after Pranab Mukherjee resigned to contest the Presidential election.

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Since then, Singh has already initiated the process of revisiting some of the measures proposed by Mukherjee.

It started with the General Anti Avoidance Rules (GAAR), but did not confine to direct tax issues alone. A file on Central Sales Tax (CST) compensation to states, cleared by Mukherjee just before leaving the ministry, was referred to the Prime Minister. The PMO raised some queries on the file, which were replied to, but there has been no word yet on its clearance.

Frenetic calls from the states to get at least a “tentative" confirmation on the GST tour so that they can go ahead with the arrangements are of no help. With the Prime Minister tightening his hold on the finance ministry, officials in the North Block know as much about the status of the file as states do.

“In Mukherjee’s tenure, the GST study tour would have easily got the nod from the Centre as has been the case in the past, but the prime minister would like to see the merit in sending such a big delegation when the states are citing substantial revenue losses if denied CST compensation," said an official.

Though all the travel and accommodation costs of the state ministers and officials are borne by their respective states, approval from the Centre is needed for a foreign trip by an official Indian delegation. The Union government may ask the states to cut the size of the delegation as names of more than two officials, as well as family members, have come from some states.

Last month, when the finance ministry released draft GAAR guidelines, Singh disassociated himself from the version and within few days, formed another committee to look into the matter. The finance ministry under his supervision has also not proceeded yet on issuing a tax notice to Vodafone.

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