The Centre and the states have reached a consensus to have common tax rate under the Goods and Services Tax (GST) regime, which is planned to be implemented from April 1, 2010, said a senior government official.
GST, which will replace almost all central and state-level taxes, would have two components — one part will go to the Centre and the other to the states’ kitty.
“The present discussions suggest that excise, service tax and value-added tax (VAT) would be all collected under GST, probably by a single agency,” Revenue Secretary P V Bhide said at a conference organised by the Confederation of Indian Industry (CII).
Collection of GST by a single authority would benefit taxpayers, compared with the current method of paying taxes and duties to multiple authorities, both at the Centre and state levels.
Bhide said the combined rate would be around the same level of tax rate being levied by the Centre and the states. But he did not divulge the exact rate.
At the moment, the central excise rates are 8 per cent and 4 per cent, service tax rate is 12 per cent, state sales tax rate are 12.5 per cent and 4 per cent, and the central sales tax rate is 2 per cent. At the current level of tax rates, the combined GST rate is likely to be below 20 per cent.
On the question of what products should be kept outside GST, Bhide said, “The empowered committee of ministers is discussing these ...Some people are interested in stamp duty to be brought in. This is a decision that we cannot take in isolation. The states have their interest in this.”
Paper, chemical, textile to see rate change
Sectors like paper, chemical and textile are likely to see changes in their tax rates when the next Budget is presented. After two rounds of cuts in excise duties, Revenue Secretary P V Bhide said the temporary changes had resulted in some distortions, adding that the same would be corrected in the next Budget.
