The service tax is likely to go down by two per cent to 8 per cent under the new Goods and Service Tax (GST) regime the Union Government wants to implement from April 1, 2010.

Unveiling the Centres final view on the impending major reform in the indirect taxation, Finance Minister Pranab Mukherjee suggested 8 per cent Service Tax from coming April 1, adding tax on goods would also be 8 per cent but from only the third year of implementation, that is, in 2013-14.

He advocated a single Central and State GST rate for both goods and services in a phased manner so that the transition is smooth and painless both for the taxpayer and the administration.

He pleaded with the states for a single rate structure at both the Centre and state levels so as to realise full potential of the new tax regime which would come into force after Parliament passes a bill in the Monsoon Session which is scheduled to begin from July 26.

The Centre is also agreeable to a dual rate structure for goods at the inception of GST while fixing it on services at 8 per cent right from the start, Mr Mukherjee told the Empowered Committee of state Finance Ministers headed by West Bengal Finance Minister Dr Asim Dasgupta.

The committee today debated the shift to the new tax regime which will subsume multiple taxes such as Central Sales Tax, Central Excise, VAT and Sales Tax once GST is implemented across the country.

GST will be levied at the end of the chain of supply instead of at production, transition and sales levels as is the case now under multiple tax regime.