The finance ministry has suggested that the Institute of Chartered Accountants of India (ICAI) take a lead and help the government in implementing goods and services tax (GST). ICAI will be carrying out a research on the implementation of uniform goods and services tax across India. For the purpose, a special group is being constituted and within a period of three months, it will come out with an approach paper to address all the issues that are likely to come up.
Goods and services tax once introduced will be the biggest fiscal reform since independence, said Ved Jain, president, ICAI. Conceptualised by finance minister P Chidamabram in 2005, when he announced introducing the value added tax. GST is a multi-stage consumption tax imposed on a broad range of goods and services. It is a tax on transactions and end-customers who consume the goods or services and bear the final cost of the tax.
The way ICAI has supported the government in its idea of implementation of VAT, we believe that ICAI will play an effective as well as constructive role in creating awareness about the benefits that the common goods and services tax will have in terms of the fiscal discipline. The approaches that would be taken up by ICAI would bring uniformity in the goods and services tax, said Ved Jain.
The goods and services tax will be quite helpful in evolving an efficient and harmonized consumption tax system in the country. The GST would be introduced on April 1, 2010. Chidambaram had earlier said, It is my sense that there is a large consensus that the country should move towards a national-level GST that should be shared between the Centre and states. However, the state and central level tax rates would differ and there may be four or more tax rates.
The Centre would have a separate tax or goods, which could be levied at two or more rates.