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There
will be two slabs for GST, but the rates will be same for
goods and services, according to West Bengal Finance
Minister Asim Dasgupta, the chairman of the panel. The
combined GST rate is likely to be within 20 per cent.
The
Empowered Committee of State Finance Ministers, which met
today, also asked the Centre for Rs 20,000 crore Plan
grant and more headroom to borrow from the market, saying
the states’ tax revenues have been hit by the current
economic slowdown.
Attempts
to build consensus on a uniform GST regime had got a boost
on November 28, a few days before the then finance
minister P Chidambaram agreed to the committee’s
proposal for a dual GST. GST will subsume central excise,
service tax, state sales tax and central sales tax, with a
few exceptions.
“He
(Chidambaram) has agreed to the empowered committee’s
suggestion for a dual GST,” said Dasgupta, adding that
“there won’t be more than two slabs.”
The
central GST will be levied and collected by the Centre,
while the state GST will be levied and collected by
states.
“States
will retain the sovereign power to levy GST. We are now
busy finalising the rates and are trying hard to ensure
that these are few and are not different for goods and
services,” he said.
As
a result of the global meltdown’s impact on the economy,
the growth in revenue collected by states started
slackening in November, when the growth was 12 per cent,
compared with 23 per cent in October this year. In
April-November period, the rate declined to 19.9 per cent
from 25 per cent a year ago.
The
collection has been hit due to the poor performance of
sectors like real estate, iron and steel, cement,
petrochemicals and textiles. Confronted with this, states
are rightly worried about protecting their Plan
expenditure and at the same time providing the economy the
stimulus to overcome the recession, according to Dasgupta.
States
also sought more headroom to borrow from the market to
fulfil their expenditure needs and demanded special
exemption from the Fiscal Responsibility and Budget
Management Act, which prescribes that a state’s fiscal
deficit should be less than 3 per cent of its GDP. They
sought continuation of central incentives even if they
overstep their borrowing limits.
On
the Centre’s move to list aviation turbine fuel as
declared goods, the committee said all states were opposed
to this and the Centre must discuss the issue with it
before tabling a Bill in Parliament.
The
states also reiterated their demand that the additional
burden of the pay revision of government employees be
borne by the Centre. “The government of India should
bear at least half the additional burden of pay revision
of states, at least for 2008-09, where relevant, and for
2009-10,” said Dasgupta.
Source
: Business Standard - Mumbai, Maharashtra, India, dated
17/12/2008
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