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The
Centre, which is likely to give its report on the
empowered committee’s recommended framework on GST in
the next 15 days, is against continuing such taxes in
the new regime.
Sources said continuing such taxes in the GST regime
would be anomalous. It would not just be against the
spirit of GST but would also lead to issues with the
input credit system.
The Centre is fine-tuning its responses on the GST
framework given by the empowered committee. The report
is expected to be finalised in a fortnight and will be
given to the committee for further discussion.
At present, purchase tax is imposed on purchases of
certain commodities in some states. The Centre’s view
is that purchase tax is levied on the same transaction
that would attract Value-Added Tax (VAT).
Moreover, states can extend the tax to any item in
future, undermining the whole objective of GST. States
such as Punjab and Haryana had opposed subsuming of the
tax citing revenue losses. The Centre, however, is of
the view that GST was to replace VAT which also gave
states substantial revenues and the argument of revenue
loss did not hold much water.
The Centre is also opposed to having separate rate for
goods and service tax as suggested by the committee in
its blue print of GST. Sources said the Centre favoured
the recommendations made by the joint working group in
this regard as that was in line with global best
practices and suited to India.
With the Centre and states not agreeing on the
structure, it is unlikely that the draft would be put
out soon for public response. A white paper on GST is to
be put up for public comments on the lines of VAT before
it is adopted for implementation.
Source
: Economic Times - Gurgaon, Haryana, India, dated
02/07/2008
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