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The
State level GST chain is likely to integrate the current
State-level VAT, other local levies and services tax on
certain specific services on which States may get the
powers to levy service tax.
“There
will be full input tax credit in the Central GST chain and
also in the State level chain, But there would be no
usability of Central GST into the State-level GST
chain,” Dr Parthasarathi Shome, Advisor to the Union
Finance Minister, said at a PHDCCI meeting on ‘indirect
tax reforms’.
Structure
impact
Dr
Shome said that the main goal of introducing GST was to
remove the cascading effect in the respective chains
(Central and State level GST chains). He highlighted that
the pleas for tax incentives could be reduced to a great
extent if the level of cascading structures were minimised.
Currently,
under the goods chain, the Centre has the powers of
taxation up to the manufacturing stage. After the
manufacturing stage and up to the final point of sale, the
States impose value added tax and other local levies. The
State-level VAT is imposed on price base that include the
excise duty, leading to some cascading of taxes.
Tax
base
Dr
Shome also made it clear that industry cannot look forward
for low GST rate (say 14 per cent) until the issue of
broadening of the tax base is addressed. There are about
60 lakh registered traders at the State level and 1 lakh
registered assesses at the Central level.
Mr
R. Sekar, Joint Secretary in the Finance Ministry,
expressed confidence that GST would be rolled out by April
1, 2010, which is the proposed introduction date announced
for this tax.
Source
:
The Hindu
BusinessLine, India, dated 29/11/2007
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