RCA

The unified goods and service tax rate may be pegged at 16%. The empowered committee of state finance ministers on Wednesday examined the possible rate structure for the new tax regime that is set to replace all indirect taxes at the central and state level from April 1, 2010. An official who attended the meeting said the deliberations were held on the rate structure, though a final view will be taken by August 2009.

 

State finance ministers are scheduled to meet Union finance minister Pranab Mukherjee this week for discussions on the budget and new GST regime. Empowered committee chairman and West Bengal finance minister Asim Dasgupta said: “We had a fairly detailed discussion with the ministers on the structure of GST. We are setting a target date of August-end for tying the loose ends.” Mr Dasgupta, however, declined to comment on the proposed rate. Currently, the cenvat rate is 8%, service tax rate 10% and value added tax rate 12.5%, taking the total incidence of indirect taxes to 30.5%. Another state finance ministry official who attended the meeting said states and the Centre will have to work out a rate structure that would be revenue-neutral and not cause any loss to the exchequer. The services sector is worried that service tax rate which is 10.3% now will suddenly skyrocket to 16% once the GST comes in to play.But some BJP-ruled states such as Madhya Pradesh have expressed reservation on the implementation of the GST regime from 2010.

Source: CAinIndia.org