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Imports
will attract Goods and Services Tax (GST) under the new
tax regime to be ushered in from next year.
The Empowered Committee of State Finance Ministers has
endorsed in principle the levy of GST on imports and
mandated a Joint Working Group to prepare a report in
four weeks on the structural changes necessary to be
adopted for this purpose.
The current thinking is to have a system where the basic
Customs duty will continue to be levied by the Centre on
goods imported.
The countervailing duty regime, however, is likely to be
altered and broad-based to include both Central and
State GSTs.
This may imply higher incidence of countervailing duty
in the proposed GST system.
The current countervailing duty regime provides a level
playing field only with regard to the excise duty
applicable on the same goods in the domestic market.
“The Empowered Committee endorsed some of the decisions
relating to the preparation of GST,” Dr Asim Dasgupta,
Chairman of the committee, told reporters here on
Thursday.
A discussion paper will be released within the end of
the month.
A draft of the discussion paper has been circulated to
the State governments so that interaction with the
trade, industry and others concerned can start
immediately, Dr Dasgupta said.
Also, the existing Joint Working Group, comprising
officials of Central and State governments, has been
mandated to prepare within four weeks a report on the
Constitutional amendments necessary for GST, the changes
required for levy of GST on imports, a draft legislation
for Central GST, a draft for common legislation for
State GST besides a draft for rules and procedures that
may be required to administer the GST.
Four-week deadline
“The
deadline for the working group will be four weeks. The
report will then be considered by the empowered
committee and then the Union Finance Minister for a
final view,” Dr Dasgupta said. He also said that the
Empowered Committee also discussed the revenue-neutral
rates of States for the GST system, but no final view
had been taken. Further discussions would be held in the
coming days. The method of compensation in a neutral
manner was also discussed.
“The Finance Ministers of Gujarat, Madhya Pradesh and
Chhattisgarh, the Deputy Chief Minister of Bihar and the
Home Minister of Karnataka emphasised that the
preparation of IT infrastructure was absolutely
essential for tracking inter-State transactions and
tying up with State infrastructure,” Dr Dasgupta said.
He also said that the Centre would have to “share a
major responsibility” in upgrading the infrastructural
requirements for inter-State transactions. The States
also drew the attention of the Committee on the need to
compensate them for the CST revenue losses arising from
GST implementation.
Indications are that the issue of compensation for CST
revenue losses will come up at the meeting between the
State Finance Ministers and the Union Finance Minister,
Mr Pranab Mukherjee, slated for October 27.
Inter-State deals
For
inter-State transactions, the Committee is now looking
at a system of Integrated Goods and Services Tax (IGST).
January 2010 has been set as the target date for
completing the preparations for IT infrastructure.
The Working Group report on service tax has more or less
been accepted.
Source
: Hindu Business Line, India, dated 08/10/2009
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