“There is an apprehension among states that they might lose revenue by switching over to GST. In that Centre has to compensate the states, We will take up this crucial matter with the Centre,” Empowered Committee of State Finance Ministers (ECSFM) Chairman Asim Dasgupta told reporters here on Thursday.
The ECSFM at its three-hour long meeting while deliberating on wide range of issues relating to the GST, which proposes to replace Central Excise duty and Service Tax at central and Value Added Tax (VAT) at state level, discussed at length on the compensation package for states, who might incur revenue losses by switching over to the new tax system
The proposed GST, which is being considered to be big ticket indirect tax system, is scheduled to be introduced across the country from April 1, 2010. In a bid to introduce uniform pattern of taxation on goods and services across the country Finance Minister Pranab Mukherjee while presenting the Budget for 2009-10 had announced that the Centre would go ahead with introduction of GST both at the national and state level.
“A delegation of ECSFM will meet the Finance Minister on October 27 and discuss several issues on the GST including the compensation package,” Dasgupta said.
Iron out differences
Ironing out differences among states the ECSFM has so far evolved a consensus for a two-tier duty structure for GST. The ECSFM has proposed one standard rate for general goods and services and another lower rate for essential commodities.
The ECSFM while proposing one GST for precious metals like gold, silver and platinum has suggested a list of goods and services which would be exempted from the purview of GST.
Dasgupta said the ECSFM would soon release a Discussion Paper on the proposed GST to get reaction from the stake holders like trade, industry and public at large.
As part of exercise to expedite the process of introduction of GST, the ECSFM had constituted a 16-member Working Committee to evolve framework as well as drafts for constitutional amendment for the purpose of allowing states to levy Service Tax for introducing GST.