Finance minister Pranab Mukherjee on Tuesday unveiled the broad contours a nationwide goods and services tax (GST) as preparations for rolling out the new regime entered its final leg.
The broad structure of the new regime was released in a discussion paper drafted by an empowered committee of state finance ministers that proposed a dual-structure a central GST and a state GST.
The new regime is aimed at removing distortions in the indirect tax regime that is currently mired in a web of levies such as excise, value added tax and service tax and various surcharges and cesses.
Once implemented, all these taxes would subsumed under one structure. There would two rates—a lower rate for essential items and a standard rate for general goods.
“It will re-distribute the burden of taxation equitably between manufacturing and services bringing about a qualitative change in the tax system,” Mukherjee said.
Both Mukherjee and West Bengal finance minister Asim Dasgupta, who is also the chairman of the empowered committee, did not specify whether the government would be able to roll out the new tax regime by April 1, 2010 as originally planned.