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The move
to amend the constitution and facilitate the levy and
collection of tax on services by states and allow GST on
imports is a clear indication of the government’s
determination to press ahead with plans to implement the
indirect tax reforms from beginning of the next fiscal.
The government is trying to put in the legal framework
that will underpin the GST and the meeting of the
empowered committee of state finance ministers with
Union finance minister Pranab Mukherjee on October 30
will finalise the contours of the comprehensive
value-added tax.
The GST, which will replace the major indirect taxes —
excise duty, service tax, value added tax and other
state taxes — with a single levy, will create a national
common market that is at present fragmented because of
multiple levies.
Though the final shape of the proposed tax is not yet
clear, the Centre is keen on moving the constitutional
amendment legislation in the winter session. But a
number of stakeholders have expressed doubt about the
government meeting the April 1, 2010, deadline.
Some states, including Tamil Nadu, Madhya Pradesh and
Chhattisgarh have cautioned against rushing into the new
regime and suggested a roll-out only after full
preparation.
Reluctant to bear the cost of reform, states have also
raised the issue of the Centre compensating them for any
revenue loss that they may incur in the process of a
switch-over to the new tax regime.
Mr Mukherjee, who is keen on introducing GST from April
1, 2010, and has already given in to the states’ demand
for multiple rates, is likely to take a liberal view on
the issue of compensation as well.
The Centre has also initiated discussions with some
large IT companies to create the technology
infrastructure for the new tax and is ready to provide
funding to states.
Source
: Economic Times, India, dated 30/10/2009 |
