This was conveyed by Union Finance Minister Arun Jaitley to Madhya Pradesh Chief Minister Shivraj Singh Chouhan, who had written a letter to him on the GST issue.   

Jaitley assured that the Centre would make all efforts to bring on board state governments and address their concerns before adopting GST, an official release said on Wednesday.

Powers of the proposed GST Council (a forum for the centre and states) will be recommendatory in nature and it would not take away the legislative autonomy of the states, the Finance Minister told Chouhan.

The central government is working on a formula for arriving at a Revenue Neutral Rate (RNR) which obviates any revenue loss to states. In the revised draft, states have been empowered to levy additional 2-3 percent of tax, it said.

This will suitably compensate states the revenue loss, if any, due to RNR. The Centre is also committed to compensate the states in case of loss of revenue, he added.

Jaitley further said the Centre has set up a Special Purpose Vehicle (SPV) to provide a strong IT infrastructure and service backbone in respect of inter-state trade of goods and services.

The SPV will take care of timely transfer of funds to the importing states in respect of taxation of inter-state supply of goods and services, he told Chouhan.

GST is a new comprehensive indirect tax regime which would subsume levies such as excise, service and local taxes and ensure seamless movement of goods and services across the country. States have raised concerns over losing autonomy once the ambitious tax structure is put in place.

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