States pitch for higher GST, centre disagrees  

The rate of the much-awaited Goods & Service Tax, or GST, might be much higher than expected. NDTV Profit has learnt that states have pitched for dual GST rate of 9 per cent and 5 per cent. But the Centre is opposed tooth and nail to these rates.
It could be the first of many shots to be fired on the goods and service tax rates. Under the proposed GST structure, the Centre too will have to follow suit with similar rates, meaning taxpayers will have to pay composite GST rates of 18 per cent and 10 per cent.

And this is precisely the problem. The Centre is not in agreement with these rates. In the first place an 18 per cent GST rate seems to be on the higher side. Also, state governments are yet to indicate which state taxes will be subsumed into the GST and what exemptions will be scrapped.

For instance, the centre wants states to bring diesel and ATF under GST while agreeing to keep petrol out of GST. Similarly, the consensus on scrapping purchase tax in favour of GST has yet to emerge among all states. States like Punjab and Haryana alone earn over Rs 5,000 crore by the levy of purchase tax. And there is also no consensus on how goods and services moving from one state to another will be brought under GST.

State finance ministers are expected to address some of these issues in the next GST meeting on the October 8. And after that finance minister Pranab Mukherjee will take stock on the 27 October.

Source : NDTV.com,  dated 06/10/2009