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"Agreement is yet to be
reached on major issues such as the treatment of
inter-state supplies of goods and services, imposition
of GST on imports," said a PwC report.
The GST is scheduled to be introduced from April 1,
2010. However, Finance Minister Pranab Mukherjee had
recently said while the Centre and the states were
serious over introducing the system as per schedule, he
would not be surprised if there was slippage of a few
months.
At present, Central Sales Tax (CST) of 2 per cent is
imposed on inter-state movement of goods, but the
proposed GST is expected to subsume CST. As such, there
has to be an agreement as to how inter-state movement of
goods will be taxed under the new regime.
While GST is not expected to replace customs duty,
sources said it may subsume other taxes such as
countervailing duty (CVD) on imported goods. But, it is
yet to be decided as to how these existing taxes would
be subsumed.
Besides, PwC said an agreement was yet to be arrived at
regarding exemptions under Centre and State GSTs, and
standardisation of procedures for implementation of new
tax system.
Some states such as Madhya Pradesh and Gujarat had
already said that GST introduction should not be
hastened just to meet the deadline.
PWC said certain issues have to be addressed before GST
is introduced.
These issues include safeguarding the interests of less
developed states, ensuring that GST is positive for
corporates, compensation for states for phasing out CST
and introducing GST, the consultancy firm said.
Besides, the Constitution is also required to be amended
to enable the Centre to tax beyond manufacturing stage
and the state governments to tax services, the
newsletter said.
The Empowered Committee of state finance ministers have
already constituted a working group to suggest
constitutional amendments and model GST Act.
GST would be most ambitious indirect tax reforms in the
country after state-level VAT. It would subsume most
indirect taxes like excise duty and service tax at the
Centre, VAT at the level of states, besides local levies
like Octroi and purchase tax.
PwC said taxes like stamp duty, toll tax, passenger tax
and road tax will not be subsumed into GST.
States have already decided to have two main rates of
GST, besides a special rate for precious metals.
However, the Centre is yet to take a call on the number
of rates that it will have.
The exact rates and the number of goods and services to
be included in GST have also not been decided yet.
Source :
Business Standard,
dated
02/11/2009
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