|
In response to the
discussion paper of the empowered committee, the finance ministry held that
alcohol and petroleum products should be included in the list of taxable items
in the GST regime as against the states' proposal of excluding them. It also
recommended a uniform threshold of Rs 10 lakh annual turnover for goods and
services for both state GST and Central GST. However, it said the threshold
exemption should not apply to dealers and service providers who undertake
inter-state supplies.
The states had argued for a higher threshold of Rs 10 lakh for state GST while
the threshold for Central GST was proposed at Rs 1.5 crore. Arguing in favour of
a single rate duty structure, a finance ministry note said the dual rate would
pose problems such as likelihood of inversions in duty structure with raw
materials and intermediates being at a higher rate and finished goods being at a
lower rate, especially as the intention is to apply the lower rate to
necessities.
It said the inversion would result in input credit accumulation and demand for
refunding the same from time to time.
The empowered committee had decided to adopt a two-rate structure -- a lower
rate for necessary items and goods of basic importance and a standard rate for
goods in general. The proposal included a special rate for precious metals and a
list of exempted items.
Around 99 items presently exempted under VAT may continue to remain exempted in
GST regime, according to the Centre's response. "There should be no scope, with
individual states, for expansion of this list even for goods of local
importance," the finance ministry note said, adding that efforts would be made
by the Centre to substantially reduce the number of items presently exempted
under CENVAT regime and that there would be a common list of exemptions for
Central GST and state GST.
Source:
Times of India, India, dated
27/01/2010
|
