The empowered committee of state finance ministers will meet in April to discuss the roll out of proposed goods and services tax (GST).
“There is a broad consensus among states regarding rates. The interactions are going on the right track. The preparations are on in full swing,” said Asim Dasgupta, the chairman of the committee and finance minister of West Bengal. Yesterday, Union finance minister Pranab Mukherjee, while presenting the General Budget for 2010-11 had said that the GST would be implemented by April 2011, against the original target of April 2010.
“It will be my earnest endeavour to introduce GST along with the Direct Tax Code in April 2011,” Mukherjee had said.
The Thirtheenth Finance Commission that tabled its report in Parliament on Thursday has suggested a single 12 per cent goods and services tax, comprising a dual levy of 5 per cent by the Centre and 7 per cent by states. The commission was also against a partial rollout of GST by some states. Earlier, Dasgupta had said that there would be two rates — one standard and another lower one- apart from a list of exempted items.
GST will subsume most of the indirect taxes at both the central and state levels. The central sales tax on inter-state tax, which has been reduced from 4 to 2 per cent, will be phased out. Service tax is also expected to be better integrated and given set-offs. “With the GST, the positive impact on the GDP and state domestic product may be as high as a 2 per cent gain,” earlier Dasgupta had said. Apart from consensus among states, and a robust IT infrastructure, a constitutional amendment is required for rolling out GST.
