Marking a convergence of views on the Goods and Services Tax (GST) slated for launch from April 1, 2010, the Empowered Committee of State Finance Ministers on Tuesday proposed that the new indirect taxes regime should subsume most of the Central levies like excise duty and service tax as well as State taxes such as VAT (value added tax) to make the transition easier for business and industry.
In its first discussion paper prepared and released by the empowered committee headed by West Bengal Finance Minister Asim Dasgupta, the States also suggested that the GST should replace the cesses and surcharges as well, both at the Central and State levels.
The draft paper, however, does not give provide any benchmark tax rates or the manufactured items to come under its purview, except making certain specific suggestions that while alcohol and petroleum tax should be kept out of GST, tobacco should be included. Besides, the committee would take a final view on whether natural gas is to be included in the GST, after further deliberations.
Finance Minister Pranab Mukherjee, who was present on the occasion, clarified that the discussion paper was by the States. “These are the views of the Empowered Committee of State Finance Ministers. We will also look into it,” he said. The Minister was also not forthright on whether the new tax regime would be introduced as initially proposed from the beginning of the next fiscal.
For, some States like Madhya Pradesh, Gujarat and Haryana have sought a delayed introduction of GST. “So far as dates are concerned, we are working on it,” Mr. Mukherjee said, when asked about whether GST would be rolled out from April 1, 2010.
The GST discussion paper has suggested that among Central taxes, additional excise duty, additional customs duty and special additional duty should be replaced by the new composite levy. Certain taxes such as entertainment tax, except for the one levied by local bodies, luxury tax, taxes on lottery, entry tax (except octroi) are proposed to be scrapped once the new tax regime is introduced.
The paper proposed that exports from SEZs should not attract GST, but sales from SEZ to domestic markets would attract the tax. Besides, industrial incentives by way of tax exemptions should be converted into cash refund schemes, it said.
