The Hindu : Business : Dual structure for GST favoured

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Thursday, Nov 29, 2007
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Business

Dual structure for GST favoured

Special Correspondent

Scope for increasing revenue collection

To be introduced in April 2010
Tax paid on inputs to be reimbursed

NEW DELHI: The Empowered Committee of State Finance Ministers on Value Added Tax (VAT) is in favour of a dual structure for Goods and Service Tax (GST) when the combined levy is introduced on April 1, 2010.

Speaking to newspersons after a meeting of the VAT panel here on Wednesday, its Chairman, Asim Dasgupta, said the committee was amenable to a dual structure — a Central GST and a State GST— and its recommendations would be sent to the Centre next month only after the panel members gave their views in writing.

“After getting the written viewpoints, we will finalise the report. But we hope to send the report to the Government by December,” Mr. Dasgupta said. In effect, while there would be more than one slab rate for the tax on goods within the GST framework, there would be a single rate for the tax on services at the State level. At the Central level, however, the rates would be decided by the Centre, he said and hoped that they would be on a similar pattern.

As in the case of VAT, there would be set off in the case of GST too. In other words, the amount of tax paid on inputs would be reimbursed, both at the Central and the State levels. Alongside, at the State level, the GST would subsume as many taxes on goods and services as possible and feasible, he said. The actual tax rates at the two levels, however, were to be decided later.

Mr. Dasgupta said that at the same time, efforts would be made to ensure that the chances of double taxation on goods and services between the Centre and States was totally avoided, which is not the case under the present dispensation.

Implementation of the new combined levy from April 2010, however, would require a constitutional amendment at the Central level as also at the state legislative level to empower states to levy tax on services. Already, from the current fiscal, States were free to collect tax on 44 services so as to compensate them for the phase-out of Central Sales Tax (CST) imposed on inter-State sale of goods. However, States are yet to agree on the services to be taxed.

Mr. Dasgupta hoped that the proposed GST would result in increased revenue collection for States and the Centre while reducing the problems of industry, trade, agriculture and the consumer.

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