GST,
which makes taxes on goods and services fit into a
simplified framework to substitute for a maze of
current taxes like octroi, sales tax and the value
added tax (VAT), is proposed to be implemented from
April 2010.
Finance
minister Pranab Mukherjee is due to meet state finance
ministers on June 11 as part of pre-Budget
consultations and would discuss the states’
preparedness to roll out the GST.
About
150 countries across the world have introduced GST or
Federal VAT in one form or the other. The GST rate in
various countries ranges from as low as 5 per cent in
Taiwan to as high as 25 per cent in Denmark.
A
joint working group set-up by the Empowered Committee
of State Finance Ministers has recommended a dual GST
system for the country, one each for the Centre and
the states.
Finance
Ministry sources said that central sales tax (CST)
would be cut by another one percentage point to one
per cent this year and eventually abolished after a
full-fledged rollout of GST.
Although
the GST rate is yet to be decided, experts believe it
could be around 14 per cent.
“Consultations
are underway on the compensation for losses, if any.
There is considerable progress in preparing a roadmap
for introducing the GST with effect from April 1,
2010,” an official said.
As
part of the compensation packages, state governments
are likely to be empowered to collect tax on 44 new
services, besides 33 existing services. Details of the
compensation are still being worked out.
The
implementation of GST would also require an amendment
to the Constitution at the Central level and
legislative changes at the state level to enable state
governments to levy services tax, which is currently
only under the Centre.
So
