Committee of state FMs agree to dual GST

The empowered committee of state finance ministers has recommended a two-tier goods and service (GST) tax for the country - one each at the central and the state level.

"The empowered committee has accepted the report on GST submitted by the joint working group. The committee will recommend adoption of dual GST to the central government," said Asim Dasgupta, chairman, empowered committee, and Finance Minister of West Bengal.

The working group, constituted in May this year, included central government and state government officials.

Under the dual GST model, to be implemented from 2010, there could be more than four rates of taxes on goods and services.  For example, there will one or more tax on goods, but one rate for services at the central level. Similarly, there will be one or more tax on goods, but one rate on services at the state level.

The GST by the central government and the state government will be on the entire chain of production. The centre and state will give tax credit to companies on the input tax levied by them separately.

Another round of discussion will be held on December 20 after state finance ministers submit their views in writing. "We will finalise the GST report on December 20, and send it to the central government by December-end," Dasgupta said.

It will be ensured that there is no double taxation after GST implementation from April 1, 2010, Dasgupta added.

Union Finance Minister P Chidambaram will take a final decision on the reccomendation of the committee on GST.

Source : The Business Standard, India, dated 28/11/2007