Some Goods and Services Tax exemptions to continue
March, 08th 2011
The central government is willing to continue with some exemptions and threshold limits to ensure early implementation of the proposed goods and services tax (GST) system, Central Board of Excise and Customs chairman S.D. Majumder said Monday.
"We are not aiming for a perfect GST. We are aiming for a good GST," Majumder said at a conference organised here by the American Chamber of Commerce in India (Amcham).
"In a perfect GST there should be no exemptions or threshold limits. But initially we will have to continue with some exemptions and threshold limits," he said.
GST is a major tax reform aimed at bringing uniformity in indirect tax structure across the country by replacing state-level value added tax, excise duty and service tax.
Majumder said the government will gradually withdraw goods and services from exemption list in a bid to enforce an effective GST regime.
He pointed out that the government has decided to withdraw 130 items from the exemption list with a view to move closer to GST system.
In the union budget for 2011-12, Finance Minister Pranab Mukherjee announced last week that 130 items, mainly consumer goods, will be taken out from the exemption list of central excise. Some 240 items still enjoy exemption from central excise.
The government plans to introduce constitutional amendments in the current budget session of Parliament to facilitate the roll out of goods and services tax.
"If the bill gets passed by the parliament, the most critical hurdle will be cleared. Then things can happen more reasonably," Amitabh Singh, chairman of Amcham's tax, tariff and regulatory affairs committee, told IANS.
On opposition from the state governments, Singh said: "This is the third draft so hopefully the concerns of most of the states might have been taken into consideration."
Some states, notably the Bharatiya Janata Party-ruled states like Gujarat and Madhya Pradesh have opposed the introduction of GST regime saying it would compromise their autonomy and result in revenue loss.
The centre and the state governments have been discussing the indirect tax reforms for the last four years.
The government has already missed two deadlines and targets rolling out the GST system from April 1, 2012.