GST: FinMin, states agree to resolve operational issues     

After deferring the introduction of goods and services tax (GST) by a year to the next fiscal, the Centre and the states today decided to at least resolve operational issues before the major differences between them on the proposed tax system could be settled.

"It was decided to at least start streamlining operational issues in a time-bound manner...There are certain basic things that should not wait for the resolution of all issues," a Finance Ministry official said here today.

Revenue Secretary Sunil Mitra today held a meeting on the GST with Empowered Committee Secretary Satish Chandra and other officials.

The meeting discussed areas of differences between the Centre and the states including constitutional issues, which unless settled will not lead to any progress in the rollout of GST, rescheduled for April 1 next, he said.

The Constitution has to be amended since currently the Centre cannot impose tax on goods beyond manufacturing and the states cannot impose service tax. Other major areas of differences relate to GST rates, threshold, and procedure of revising rates, he said.

While the states have suggested two rates for goods and one for services, the Centre favours one rate for goods and services. As these issues hold back GST rollout, officials decided to start working on streamlining and unification of tax administrative processes, data exchange between the Centre and states, and operationalisation of the GST system.

Automation of tax administration in the states is also on the agenda for upgradation of computer systems and for a networked environment. Relocation of tax offices and manpower will also be required in the new scenario, he said.

Source: Business Standard, India, dated 09/04/2010