State finance ministers are likely to finalise rates for the goods and services tax (GST) at a meeting of the empowered committee scheduled for January 7, said Jammu and Kashmir Finance Minister Abdul Rahim Rather here today.
“Rates may be decided...We are working on the revenue neutral rate and it would be discussed on January 7,” said Rather, who is a member of the Empowered Group of State Finance Ministers on GST.
While the GST committee set up by the 13th Finance Commission has suggested a rate of 12 per cent to be split between the states and Centre at 7 per cent and 5 per cent, respectively, several states want it to be at least 15 per cent.
The empowered committee will take a final call on the GST rate, which will subsume levies like excise, VAT and service tax, at its January meeting.
The GST rate, Rather said, needs to be revenue-neutral and should not result in any loss to the states. “The states should not suffer revenue loss and if there are some losses then the Centre has said that they would compensate us,” he added.
GST is aimed at doing away with most of the indirect tax levies by the Centre, like excise and service tax and others levied by the states like VAT and octroi. The new tax regime also has a scheduled deadline for implementation by April 1, 2010.
However, implementation could be delayed by almost a year, as the required Constitutional amendments are yet to be done and also the draft amendment Bill could not be tabled in the Winter session of Parliament.
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The Finance Commission’s task force has recommended a six-month delay for the GST introduction, while many tax experts and Bihar finance minister Sushil Modi called for one-year delay.
The proposed GST regime is aimed at making the tax structure simpler and reduce the indirect tax burden on the consumer by about 25 per cent.