GST saga drags on as states quibble

The much-awaited timeline for rolling out a nation-wide goods and services tax (GST) will not be known before the month-end.

The much-awaited timeline for rolling out a nation-wide goods and services tax (GST) will not be known before the month-end.

HT Image

“We will meet by month end and hope to finalise the date and the rate of GST,” chairman of empowered committee of state finance ministers and West Bengal finance minister Asim Dasgupta told reporters here.

The new regime, billed as the most ambitious tax reform initiative to be undertaken in the country, is aimed at removing distortions in the indirect tax regime currently mired in a web of levies such as excise, value added tax and service tax and various surcharges and cesses.

A task force of the 13th finance commission has proposed a single 12 per cent rate for GST. This would consist of a 5 per cent tax imposed by the Centre and 7 per cent by the states.

This is different from the structure proposed by an empowered committee of state finance ministers that had proposed two rates—a lower rate for essential items and a standard rate for general goods. The committee, however, did not specify the rates.

State governments, however, were not happy with the recommendations of the task force.

Before introducing GST, states wanted to phase out central sales tax (CST) and have sought compensation for cutting the rate by 1 percentage point, Dasgupta said.