Budget watchers are keenly awaiting the governments take on the proposed comprehensive indirect taxes reforms. Finance ministry insiders say that the item is on top of Pranab Mukherjees agenda, but they are not willing to hazard risk on whether he will go ahead and announce a timeline for the rollout of goods and services tax (GST).
The ministry is keen to launch it from October, after it became clear that the initial deadline of April 1, 2010 will not be met. The GST seeks to create a pan-India market by subsuming all state taxes such as value added tax, entertainment tax, luxury tax, purchase tax, entry tax and central taxes like excise duty, service tax, countervailing duty and special additional duty.
A disagreement between the Centre and states is holding back the GST rollout. The Centre is keen on rolling it out in October, while states want to postpone it to next financial year. A little bird tells us that the minister may make a statement in his budget speech on the United Progressive Alliance governments commitment to this reform, but will not mention the new date.
A COMMON CAUSE
The finance ministry is giving a serious thought to the petroleum ministrys proposal to tweak the investment-linked tax incentive for gas pipelines to make it industry friendly.
A tax holiday was announced in the last budget subject to certain conditions that included allowing a third of the total pipeline capacity for common carriage. This condition has been imposed for pipelines that carry natural gas, crude and petroleum products.
The oil ministry wants the finance ministry to relax the condition, bringing down the quota to a fourth, in line with the Petroleum and Natural Gas Regulatory Boards recommendations. Since, the proposal does not really involve any tax giveaways, and only seeks to boost creation of energy infrastructure in the country, it may find favour with finance ministry mandarins.