Raising of excise duty by 2 per cent to the level of service tax at 10 per cent in the Budget is a sign of preparing for the rollout of the now deferred Goods and Services Tax (GST), says the finance ministry.
“The big signal that comes out of this (excise increase) is the committed move to unified GST. They are both at ... 10 per cent excise for manufacture, 10 per cent for services,” Revenue Secretary Sunil Mitra said here.
The states and the Centre differ over the structure of the proposed GST, which will replace most of the indirect taxes at the Centre and state levels. The new tax system was to be implemented from April 1, 2010.
Though the Centre had been exuding confidence of reaching an amicable solution with the states on the differences, it has accepted that GST would be implemented at a later date and the next likely date for the rollout is April 1, 2011.
However, the revenue secretary said, though the rate of GST would be decided later after there was a consensus among states, the economy had at least moved on to the feature of uniformity, which the new indirect tax regime promises.
“This Budget is a signal that we are committed... you see, it’s more than just a Budget. It is actually a policy statement for the years going ahead. We are moving to a unified goods and services structure regime,” he said.
On the possibility of GST rate being 10 per cent, he said it was premature to comment on it.
“GST is essentially going to happen with consensus among 28 states. Now, until we achieve that, how much it (rate) will be is difficult to predict,” Mitra said.
The introduction of GST is delayed, as states have been asking for two main rates for goods under GST, besides a special rate for precious metals and an exemption list.
