Two-tier goods & services tax rates get nod

States bury differences and arrive at a consensus on the dual rate regime

“States have agreed to have two rates for GST. There will be one standard rate for general goods and services and another lower rate for essential commodities,” Empowered Committee of State Finance Ministers (ECSFM) Chairman Asim Dasgupta told reporers here.
A consensus to this effect emerged at the three-hour long meeting of the ECSFM held here.

The meeting, which discussed on various issues relating to proposed introduction of GST, was also attended by senior officials of the finance ministry. While admitting that there were divergences of views among states on introduction of the proposed GST, Dasgupta said “after prolonged discussions we have narrowed down differences and agreed for two tier- GST at the state level.”

Dasgupta said “expression of reservations over various aspects of GST has not been party-centric. Some like Karnataka and Gujarat are quite supportive of GST. All I can say is that differences have been narrowed down.” 

Compensation for loss
Some of the North Eastern states as well as states belonging to special category wanted the Centre to compensate them in case they incurred revenue loss by switching over to GST. “In principle the Centre has indicated some kind of mechanism can be evolved for compensating states,” he said.

Asked whether the Centre would also have two-tier GST as envisaged by states, Dasgupta indicated that the GST at the central level would have a “good deal of conformity” with state level GST. GST proposes to replace Central Excise duty and Service Tax at central and Value Added Tax (VAT) at state level.