EGoM to debate GST rates today  

The empowered committee of state finance ministers will, on Tuesday, discuss the rate structure of the proposed goods and service tax (GST). The meeting will also take up the Centre’s views on merging other taxes like octroi, electricity tax and purchase tax in the GST.

Though the Centre and states have reached an agreement on the basic structure, some minor differences still remain, a government official said. These issues, which also have implications on the rate structure, are likely to figure at the meeting, he added. The most crucial aspect of the GST — the rates — will, however, dominate the deliberations of the panel.

The GST which will come into effect from April 1, 2010, will subsume central levies such as central excise, additional excise, additional duty of Customs or countervailing duty, service tax and state taxes levied on goods such as state value added tax. The GST will have two rates, one at the state level and the other at the federal level with two slabs, as per the agreed structure between the Centre and states.

The Centre has also asked states to look at bringing petroleum products including crude, high-speed diesel and petrol within the ambit of the GST. Currently, these products are outside the VAT regime and state governments levy sales tax which varies between 25% and 33% from state to state.

The official said both the Centre and states have begun groundwork on the rate structure and are expected to report the progress on this front to the panel. Turnover threshold, below which no GST can be levied, and exemptions are also expected to figure at the meeting.

At present, there is no uniformity in the threshold which varies for VAT, excise and services tax. The threshold exemption for state VAT is Rs 2-10 lakh, service tax is Rs 10 lakh and excise duty is Rs 150 lakh.

Source : Economic Times - Gurgaon, Haryana, India, dated 20/01/2009