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Based
on the success of VAT, the government has decided to
introduce GST for all goods and services.
"Centralisation
of sales taxation is not essential.... and central and
state taxes can exist side by side," said the apex
bank.
The
RBI suggested that a system of concurrent taxation
consisting of a state GST (SGST) and a central GST (CGST)
would be a viable medium-term option.
GST
is a multi-stage consumption tax imposed on a broad range
of goods and services. It is a tax on transactions and
end-customers who consume the goods or services bear the
final cost of the tax.
However,
the report also pointed out that the component of tax
rates of central and the state GST is still to be
determined.
Reasoning
out its claim that there is administrative support for the
two-tier system, RBI said, "the Centre's
administrative capacity vests with the central excise
department whereas the state's have a larger capacity in
the form of states' sales tax establishment."
The
RBI report on states finances talks of various models for
GST collection like collection at federal level and
sub-national level but goes on to suggest dual level
collection as the best suited for the country.
The
GST is seen as a step towards simplification of the sales
tax system and is expected to bring about an efficient and
harmonised consumption tax system in the country.
The
idea for the GST system was floated by Finance Minister P
Chidamabram in 2005 when the value added tax (VAT) was
introduced.
The
finance ministry with an aim to move towards a national
level goods and services tax (GST) that should be shared
between the Centre and the states has proposed April 1,
2010 as the date for introducing GST.
While
a decision on the GST model to be adopted still needs a
lot of deliberation, the Kelkar Committee has already
suggested a 20 per cent combined GST rate.
Source
:
Hindu -
Chennai, India, dated 06/01/2008
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