The government today said the proposed Goods and Services Tax (GST) would help lower the incidence of taxes by avoiding cascading effect of multiple levies.

"Proposed GST would help achieve common market for goods and services at lower tax rates, avoiding cascading effect of these taxes," Finance Minister Pranab Mukherjee said at CII conference on Competition Policy.

He said the Empowered Committee of state finance ministers has released a discussion paper on GST and all the stakeholders will deliberate over it.

As per the paper, there will be two basic state GST rates on goods, besides a special rate on precious metals. However, services will attract single rate.

It proposes replacing central levies like excise duty, service tax, special additional duty, countervailing duty by GST.

State levies like VAT, sales tax, entry tax etc would also be subsumed. Besides all this, central and state cesses and surcharges would be out, once GST comes.

The Finance Minister also allayed fears that private sector would be left with little resources because of high fiscal deficit.

The low credit offtake and ample liquidity proves that these fears are misplaced, he said.