The Prime Minister’s Economic Advisory Council, or PMEAC,
has favoured a single slab each for goods and services
or one common rate for both under the proposed goods and
services tax (GST), unlike the proposal mooted by the
states.
“The Centre could follow the pattern in which there is
only one rate for goods and one rate for services, or
one rate which is common to both goods and services,”
PMEAC Chairman C Rangarajan said.
He added that there was an advantage in having a single
uniform rate. When asked whether precious metals should
have separate slab as suggested by the empowered
committee of state finance ministers, Rangarajan said:
“I think the advantage lies in having one single rate.”
A discussion paper floated by the empowered committee
suggested two main rates for goods, besides a special
rate for precious metals. However, for services, the
committee proposed just one rate. It also suggested that
some goods be exempted from the proposed GST.
The committee further expected that the Centre would
follow the same structure for GST as mooted by it.
However, a task force, set up by the 13th Finance
Commission, has suggested a single GST for the Centre
and the states, though the rates proposed are different
for both. For the Centre, it suggested a 5 per cent GST
rate, while for the states, it proposed a 7 per cent
rate.
GST, the proposed uniform indirect tax regime, will do
away with most of the prevailing indirect taxes such as
excise duties and service tax levied by the Centre and
the state-level taxes such as octroi, value added tax
(VAT) and others.
Tax experts believe that a single rate, as suggested by
the 13th Finance Commission, would be an ideal situation
but not the one to start with. “One rate for GST is an
ideal thing to do but not to start with. This could be
achieved in the long run, once the new regime is
established well,” said Paratik Jain, executive director
(indirect taxes) of KPMG, a financial consultancy firm.
Jain also pointed out that the rollout of the tax could
be delayed from the scheduled deadline of April 1, 2010,
to October 1, 2010, saying many work was left to be
done. With lots of structural work still to be done like
the Constitutional amendment, the GST Draft Bill to be
tabled in Parliament, and most importantly, the rates to
be finalised, there are voices from various quarters
that the GST rollout could be delayed.
Last week, Asim Dasgupta, chairman of the Empowered
Committee of State Finance Ministers, had said GST would
have four slabs and were likely to be unveiled within 15
days.
Among the GST tax slabs, it would be zero for exempted
items, one standard rate for majority of the goods and
services and another having a moderate rate, he said.
Source: Business Standard, India, dated 21/12/2009
