Pranab moves in on march towards GST
Finance Minister Pranab Mukherjee will meet state finance ministers on Tuesday to discuss the preparation for rolling out a nationwide goods and services tax (GST).business Updated: Nov 10, 2009 20:53 IST
Finance Minister Pranab Mukherjee will meet state finance ministers on Tuesday to discuss the preparation for rolling out a nationwide goods and services tax (GST).
The empowered of group state finance ministers headed by West Bengal Finance Minister Asim Dasgupta would release a discussion paper on the new tax regime.
The final form of GST is envisaged to be a comprehensive value added tax (VAT) on goods and services and is aimed at removing tax distortions that exist today.
The indirect tax system is mired in a multi-layered structure that includes levies such as excise duty, central sales tax, VAT and service tax among others.
A joint working group of state finance ministers would also draft a constitutional amendment bill for introduction of GST. The implementation of GST would also require Constitutional amendment at the Central level and also at the State Legislative level to give rights to States to levy services tax.
About 150 countries across the world have introduced GST or Federal VAT in one form or the other. The GST rate in various countries ranges from as low as 5 per cent in Taiwan to as high as 25 per cent in Denmark.
“Consultations are underway on the compensation for losses, if any…there is considerable progress in preparing a roadmap for introducing the Goods and Services Tax with effect from April 1, 2010,” an official said.
As part of the compensation packages, the state governments are likely to be empowered to collect tax on 44 new services along with 33 existing services.