BUDGET-2010: Goods and service tax in 2010 – still a very remote possibility     

The Union budget 2010 is likely to be presented on 26th Feb 2010 and further since the declared deadline for introduction of Goods and service tax of 1st. April 2010 is coming very near hence there is an expectation that the Finance Minister Mr. Pranab Mukharjee will make a concrete statement about the date of introduction of Goods and service tax in India.

The Goods and service tax, once considered to be a biggest reform in the history of Indian taxation, is marred with the confusion and non –agreement on various issues between the centre and the state Governments.

The Goods and service tax, as promised to be a Single National Level tax replacing the State level VAT and two major central taxes i.e. Central Excise and Service tax but since states are not agree to surrender their right to tax and share the revenue of National GST with the centre hence now what is going to be introduced in India in the name of GST is a dual GST in which both state and the centre will impose tax on the same transaction.

But this compromised format of the GST is also not free from controversies and confusions related to rate of tax (whether single or dual rate- states have suggested dual rates i.e. lower for essentials and General for others but centre is favoring the single rate, the exemption list, the threshold limit for CGST (Central Goods and service Tax), tax on alcohol and purchase tax etc.

The empowered committee of state Finance Ministers has issued Discussion paper on GST in the month of Nov 2009 setting forth the basics of “dual GST” and at the initial stage after issue of this discussion paper , there was an impression that states and centre are broadly agreed on the basics of this Indian version of GST but then came the report of task force of 13th Finance Commission which shows that still there are major differences.

As far as the date of introduction of GST is concerned there are conflicting statements from Finance Minister Mr. Pranab Mukharjee and Chairman of Empowered committee of the state Finance Ministers Dr. Asim Das Gupta.

Some of the states are also not agree on the date of 1st. April 2010 and even not willing to introduce it in the middle of the year. ICAI in its recommendation have also suggested that it should be postponed for a year.

Practically both the centre and states have to agree on basics of the Goods and service tax and unless this is done very fast and on urgent basis the GST in 2010 is still a very remote possibility.

Source: MyNews.in, India, dated 20/01/2010