General, assembly elections block committees road to GST structure
March, 14th 2009
The empowered committee of state finance ministers, which is now tasked with the formulation of goods and services tax (GST) structure, is unlikely to hold meetings over the next two months due to forthcoming general and assembly elections.
The committee members will not only be busy in the elections, ministers from three states would also be under the model code of conduct that bars a major policy decision. Since the GST negotiations have large-scale ramifications not just for the revenues of states but also the public at large, most members would not want to make a commitment.
Polling for the 15th Lok Sabha would be held between April 16 and May 13 in phases while that for assembly elections in Orissa, Sikkim and Andhra Pradesh would be held from April 16 to April 30.
However, the three sub-groups formed by the committee to examine the different aspects of the GST structure will continue their deliberations. The sub-groups are expected to hold the next round of meetings on March 16-17 in the Capital, said a government official who did not wish to be named. The sub-groups are to submit their report to the panel of state finance ministers by the month-end.
The joint working group on GST had suggested that states should tax intra-state services while inter-state service should remain with the Centre. On exempting some items, it had recommended keeping petroleum products out of the structure in line with the present regime.
At present, petroleum products are out of the value-added tax regime. Some states, however, want more items like alcohol out of GST regime. The sub-groups have been formed to thrash out these issues. They are looking at the list of exemptions, inter-state goods and services, and all services. The work on GST rate structure would only start after the issues are settled.
GST is proposed to be introduced from April 1, 2010, to integrate all indirect taxes on goods and services at the state and central levels.