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"Chairman
of Empowered Committee is trying (to resolve the issue).
I am hopeful that it is possible to have convergence of
views," Union Finance Minister Pranab Mukherjee told
reporters here.
The Empowered Committee of state finance ministers is
meeting under the chairmanship of West Bengal finance
minister Asim Dasgupta to work out agreements on various
aspects of the GST.
The states are yet to reach a favourable agreement on
certain aspects of GST like rates, items to be covered
and issues related to compensation to states that would
lose out on their earnings, even as the April 1, 2010,
deadline for the introduction of the proposed tax draws
closer.
While states have decided to have two main GST rates,
besides one special rate for precious metals, the Centre
is yet to take a call on it.
The proposed indirect tax regime would replace most of
the indirect tax levied by the Centre like excise and
service tax and subsume state-levied taxes like VAT and
local taxes like octroi and purchase tax.
However, some states have reservations on doing away
with the local taxes as that could impact their
financial autonomy.
Also, dearth of data on the services sector with the
states is posing problems in fixing the rates for
services.
Some states like Madhya Pradesh and Gujarat have said
that GST introduction should not be done in a haste.
Gujarat finance minister Saurabh Patel has written to
Dasgupta that GST should not be implemented unless there
is clarity on subsuming of cesses and surcharges levied
by the Centre and on issues pertaining to purchase tax.
The Empowered Committee has also set up a group to
suggest changes in the law and model GST legislation as
its implementation would require certain constitutional
amendments.
The joint working group on GST, that met yesterday, is
expected to put forth its recommendations to the
Empowered Committee at its meeting today.
Source
: Business Standard, India, dated 08/10/2009
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