“The Centre could follow the pattern in which there is only one rate for goods and one rate for services, or one rate which is common to both goods and services,” Prime Minister Economic Advisory Council Chairman C Rangarajan told PTI.
He added that there is an advantage in having single uniform rate. When asked whether precious metals should have separate slab as suggested by empowered committee of state finance ministers, Rangarajan said, “I think the advantage lies in having one single rate.”
A discussion paper floated by the empowered committee suggested two main rates for goods, besides a special rate for precious metals. However, for services the committee proposed just one rate. It also suggested that some goods be exempted from the proposed GST.
The committee further expected that the Centre will follow the same structure for GST as mooted by it.
However, a task force set up by the 13th Finance Commission has suggested a single GST for the Centre and the states, though the rates proposed are different for both. For the Centre, it suggested five per cent GST rate, while for the states it proposed seven per cent rate.
The Goods and Services Tax, the proposed uniform indirect tax regime, will do away with most of the prevailing indirect taxes such as excise duties and service tax levied by the Centre and the state-level taxes such as octroi, VAT and others.
Ideal situation
Tax experts believe that a single rate, as suggested by the 13th Finance Commission, would be an ideal situation but not the one to start with.
“One rate for GST is an ideal thing to do but not to start with. This could be achieved in the long-run, once the new regime is established well,” said KPMG Executive Director—Indirect Taxes Paratik Jain. Jain also pointed out that the introduction of the tax can be delayed from the scheduled deadline of April 1, 2010 to October 1, 2010, saying many work is left to be done. With lots of structural work still to be done like the Constitutional amendment, the GST Draft Bill to be tabled in Parliament and most importantly the rates to be finalised, there are voices from various quarters that the GST introduction could be delayed.
Tax compliance
Last week, Chairman of Empowered Committee of State Finance Ministers Asim Dasgupta had said GST would have four slabs and and are likely to be unveiled within 15 days
Among GST tax slabs, it would be zero for exempted items, one standard rate for majority of the goods and services and another having a moderate rate, he said.
Precious metals are likely to continue to attract one per cent. This has to be done to bring uniformity in tax compliance for the business community and to facilitate them to maintain only a single book of accounts for both state GST and Central GST tax payment, Dasgupta said.