Empowered panel gives thumbs-up to dual GST

The stage looks all set for the introduction of unified goods and service tax (GST) from 2010. The empowered committee of state finance ministers on Wednesday gave its go-ahead for dual GST — both at central and state level.

“The empowered committee has accepted the report of GST as submitted by the joint working group and in turn also recommended adoption of dual GST — central GST and state GST,” empowered committee chairman Asim Dasgupta told reporters.

There would be more than one slab of tax for goods, but a single rate for services within the GST framework. At the central level, the rates would be decided by the union government, Mr Dasgupta said, adding that states and centre would attempt to keep them uniform. Set offs would also be available against tax paid on inputs at both central and state levels. He said states and the centre will fix their respective GST rates after ensuring their will be no revenue loss from the proposed changes.

GST at the state level will subsume as many taxes on goods and services as possible and feasible. However, exact rates at the state and central level would be decided later. “To work out points of details, there is a need to hold another round of discussion. States have been asked to submit their views in writing,” he said.

The committee will finalise its set of recommendations after getting states’ responses and submit them to the centre by December end.

He said efforts would be made to ensure that there is no double taxation on any goods and services between the centre and states, which is there on some goods under the present dispensation.” Our endeavour is to ensure that at any stage of implementation, collection problems of dealers, manufacturers of trade and agriculture are reduced from now,” he said.

Implementation of GST would also require constitutional amendment to pave the way for giving right to levy tax on services to states.

The panel has suggested that it would subsume levies like excise duty and service tax into a single federal GST, while states would need to merge value-added tax and local levies into a state-level GST.

Source : The Economic Times,  India, dated 29/11/2007