Consumers likely to gain from dual goods, services tax
December, 21st 2007
Overall tax incidence will be lower: VAT panel chief
The proposed GST is expected to benefit traders, industry and some State Government besides the consumers.
State Finance Ministers constitute a committee to recommend a rate structure for the proposed dual GST regime.
Consumers may gain from the implementation of the proposed dual goods and services tax (GST) regime by March 2010 as this tax system would be designed in such a manner that the overall incidence of tax, including commodities and services, will be lower than before.
Besides consumers, it would be better for traders, industry and also for certain State Governments. It (GST) may be a positive sum game collectively speaking, Dr Asim Dasgupta, Chairman of the VAT panel, told reporters here after a meeting of the State Finance Ministers. He however made it clear that gains to consumers were dependent on the lower incidence being passed on to them.
State Finance Ministers on Thursday decided to constitute a committee to recommend a rate structure for the proposed dual GST regime. The committee would comprise State finance secretaries and commissioners of commercial taxes from all States and also four joint secretaries from the Union Finance Ministry. The report of the committee would be ready in a month. Plans are also afoot to come up with a white paper on the proposed GST regime after getting feedback not only from the Union Finance Ministry, but also the trading community, industry and agriculture.
This time (for GST) we have little more time compared to VAT and so there will be wide consultation, he said. Under the proposed dual GST model, there will be a central GST and State GST. It will be so structured that the central GST would be levied by Centre and the State GST by States. In each structure, in a common manner, there will be integration of as many indirect taxes on commodities and services as possible.
The rates would be very few, he said, adding that harassment on traders would be minimised.
Dr Dasgupta said that the proposed GST model recommends that the power of levy on all services should be with the Centre as well as States. He also later said that issues relating to education and health may not be included in the service tax ambit of the States, particularly those catering to the common man.
Dr Dasgupta also said that States have already indicated that certain taxes may not be subsumed under GST immediately.