KOLKATA: Trinamool Congress has decided to throw a lifeline to the Narendra Modi government on passing the Goods and Services Tax (GST) bill in Parliament. Prodded by chief minister Mamata Banerjee, state finance minister Amit Mitra on Thursday informed Union finance minister Arun Jaitley of the party's "in principle" support to the new tax regime. However, certain tax-related issues on which the state enjoys autonomy, will have to be sorted out before the bill sees a safe passage, Trinamool has said.

"Our party is in favour of GST in general. The new tax regime finds a mention in our party manifesto. But there are certain tax-related issues that need to be sorted out. Some of them have been addressed, while some are pending discussion. Things are moving in the right direction so far," said Trinamool national spokesperson Derek O'Brien.

Last month, Trinamool had also helped the Modi government pass the coal and mines bill in Rajya Sabha.

The opposition Left and Congress sniffed in Trinamool's latest gesture a "tacit understanding" between it and BJP for mutual benefit. Congress leader Abdul Mannan argued that Mamata Banerjee wants the Centre to go slow on the Ponzi scam probe as a trade-off for helping pass the GST bill in Rajya Sabha.

Things on the GST started moving in December 2014 when Mitra shot off a letter to Jaitley listing the estimated revenue loss for the state after GST rollout. The highlight of Mitra's letter was the estimated loss of Rs 4,480 crore at one go on account of central sales tax (CST). This apart, Mitra demanded that the state be allowed to retain its autonomy in taxing select items like petroleum, diesel, aviation turbine fuel and natural gas. He also insisted on retaining the state's higher tax rate on tobacco and tobacco products.

According to Trinamool sources, the Modi government has already paid Rs 540 crore as first instalment of CST compensation for four consecutive financial years — 2010-11, 2011-12, 2012-13 and 2013-14. Jaitley also assured Mitra in a meeting in Delhi on Thursday that the Centre will soon release another two instalments adding up to Rs 3,940 crore.

The Union finance minister also has no problem with states retaining the right to tax petroleum, diesel, aviation turbine fuel and natural gas along with the Centre for the first five years after GST comes into force. The draft constitutional amendment bill has incorporated a section that provides that states "may" tax petroleum and petroleum products for the stipulated period. But Mitra isn't in a mood to leave anything to chances and wants the "may" clause to be replaced by "shall". The Union finance minister has promised to look into it.

However, Jaitley has shot down the state's proposal to retain the higher tax rate on tobacco and tobacco products— a considerable source of revenue for Bengal.