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State will rework its tax structure: Isaac

Special Correspondent

NEW DELHI: Kerala Finance Minister T.M. Thomas Isaac on Thursday said the Empowered Committee of State Finance Ministers on Value Added Tax (VAT) had accepted, in principle, the State's arguments against a uniform tax rate for the entire country. Having secured this nod from the Committee, which met here on Thursday, the Minister indicated that his Ministry would rework the tax structure for the State in the coming Budget.

With Kerala's tax collections coming down post-VAT, the State's contention is that while a unified system of taxation was welcome, there should not a uniform rate of tax. Instead of the prevailing regime, where the Centre fixes the rate of tax on various commodities, Mr. Isaac told the Committee that the Centre should only decide a floor rate. States can either accept the floor rate or levy a rate above it.

Briefing mediapersons after the meeting, Mr. Isaac said this would not only address the problem facing Kerala, which had suffered revenue loss post-VAT because of a reduction in tax on luxury items from 22 per cent to 12.5 per cent, but was also in keeping with the federal structure of Indian polity.

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