GST committee to meet tomorrow, discuss negative list
November, 28th 2011
The Empowered Group of State Finance Ministers will meet here tomorrow to deliberate on the revised draft negative list, among various issues, for roll out of the ambitious Goods and Services Tax (GST) regime.
The Constitution Amendment Bill for roll out of GST was introduced in Parliament during the last Budget session and has been referred to the Standing Committee on Finance.
The issue of declaration of natural gas in the declared goods category that will limit the rate of Value Added Tax is also on the agenda of the meeting "We want the negative list to be modified as state governments would suffer losses as per the proposed list," Madhya Pradesh Finance Minister Raghavji told PTI.
Earlier this month, the government came out with a revised draft negative list which indicates that health facilities, non-AC train travel, education, metro and taxi would be kept out of the service tax net.
At present, only a limited number of services come under the tax net. By way of a new negative list, the government proposes to tax many of the services by making the new list effective.
The negative list will include services like funeral, burial and mortuary agencies, interest paid on deposits by bank, services provided by independent journalists, dividend on investments, and passenger travel in public transport.
The other services which figure in the negative list are copyright, dramatic and artistic work, services provided by recognised political parties, advertisement other than those published in newspaper and broadcast by radio and TV or displayed in other electronic media.
At present, the Centre imposes 10% tax on 119 services.
Services account for nearly 63% of India's GDP and widening of the net could yield an additional 20% in service tax. The government proposes to collect Rs 82,000 crore from service tax during 2011-12.
"We will also discuss the proposal of the Centre to include Natural Gas in the declared goods category which would reduce the states' income," Raghavji said.
Besides, industry bodies are expected to make presentations on issues related to GST and put forth their views, he added.
The Empowered group, headed by Sushil Kumar Modi, who is also the Deputy Chief Minister and Finance Minister of NDA-ruled Bihar, will discuss the states' views on the contentious indirect tax, which has been hanging fire for quite some time due to disputes between the Centre and states.
These issues include provision for states to levy cess in case of natural calamities, their autonomy in matters of taxation, concerns on powers of the proposed dispute settlement authority, and concerns of state governments on loss of revenue on account of reduction in the Central Sales Tax (CST) rates.