Sources told NDTV Profit, the Finance Minister has indicated that all states will have to be on board for a successful rollout of GST. This means, states will also not have an option to walk out of the new regime at a later point in time.
Mr Chidambaram's firm suggestion is a clear indication that all states will have to agree to join the GST regime, if the Union Finance Minister, has to announce a rollout date, which he wants to do, in the coming Budget.
The Finance Minister met state finance ministers in New Delhi on Thursday to seek their approval on a framework for GST in order to be able to include a broad outline of the indirect tax regime in the Union Budget for 2013-14, scheduled to be tabled in Parliament on February 28.
Meanwhile, Bihar Deputy Chief Minister and Finance Minister Sushil Modi, who also chairs the GST empowered committee, said that the Centre has agreed to compensate states for Central Sales Tax (CST) losses of fiscal year 1010-11. The Centre has given Rs 6,393 crore as compensation so far, while the states have claimed a CST loss of Rs 19,000 crore.
It is possible the Centre might give an additional Rs 12,607 crore as the unpaid balance for CST loss in the coming Budget, sources indicated.
Mr Chidambaram had recently told state finance ministers that he would include a broad outline of the Constitution Amendment Bill on GST in his Budget speech if there was a consensus.
An Empowered Committee of State Finance Ministers had last month, in Bhubaneshwar, reached a broad consensus on the design of GST, under which the states were supposed to be free to decide on the time of its introduction.
The empowered committee had also decided to suggest to the Finance Ministry the incorporation of provisions to allow states to opt out of the GST fold, thereby making it optional.
The states had agreed to a lower payment of Rs. 34,000 crore for phasing out CST, a pre-condition for rollout of the GST, and had also agreed that instead of a single rate for GST, there would be a floor rate with a band, giving freedom to the states to fix their own rates.
After today's meeting, Mr Modi, said the stakeholders had decided to set up committees to look into the issues of dual control as well the threshold and exemption in the GST regime.
At today's meeting, there was a broad consensus that the Constitution needed to be amended to bring in GST, Mr Modi said, adding that the empowered committee would now draft a model GST Bill, which would be passed by each state legislature.
The full compensation against CST collection fall for the fiscal year 2010-11 will be given in the upcoming Budget, he said.