Centre, states near consensus on Goods and Services Tax
October, 26th 2012
The UPA government's most ambitious tax reform, the Goods and Services Tax (GST), moved a step closer to implementation as the Centre and the states narrowed down their differences on several contentious issues. An announcement is likely on November 8 when finance minister P Chidambaram meets the empowered group of state finance ministers.
Bihar deputy chief minister Sushil Modi, who is also the chairman of the empowered group, told reporters after meeting Chidambaram that the states and the Centre have reached a consensus on most issues blocking the rollout of GST.
GST is set to streamline the movement of goods and services across India with a single tax structure replacing most indirect taxes such as central excise, service tax, VAT, purchase tax and surcharges. PM Manmohan Singh has said that rollout of GST would send a strong signal about reforms.
GST rollout to lessen tax burden on consumers
Implementation of the tax reform, the goods and services tax (GST), is likely to bring down the overall burden on consumers significantly as the total tax at the state level and the Centre combined is expected to be lower than 18%.
Currently, all indirect taxes on any goods and services add up to more than 30%. Rollout of the tax is expected to boost revenues and growth. GST was scheduled to be implemented from April 1, 2010, but missed the deadline due to lack of consensus among states that were worried about losing autonom. tnn
There is a long way to go before the goods and services tax (GST) becomes reality, but this is an important stage in its journey. The GST is necessary to modernize and rationalize India's tax system and bring it in line with global best practices. It is a welcome development, therefore, that the states and Centre have been able to reach an agreement on the contentious issues that had so far stalled progress on its introduction. We hope that now that an agreement has been reached, all concerned will do their best to expedite introduction of the new tax regime.