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All back uniform goods, service tax regime: Mukherjee
August, 04th 2010

Finance Minister Pranab Mukherjee Wednesday made a plea to all political parties to help implement a pan-India goods and services tax from April next year by supporting the relevant bill to amend the constitution, without delay.

'It has to be supported now. It must be introduced in parliament in this session itself. Otherwise it will again be indefinitely delayed, since many states would be going for elections in the coming months,' Mukherjee told the Lok Sabha.

'Constitution Amendment Bill must be introduced in this session for Goods and Services Tax,' the finance minister said during the course of his 50-minute reply to the debate on rising prices, an issue which affected the conduct of business in the house for the whole of last week.

Mukherjee said the uniform tax measure to replace the central excise and state levies will also eliminate the scope of individual discretions of state and central finance ministers in imposing taxes and serve the larger goal of keeping a check on prices.

'The Bharatiya Janata Party, too, had said in its manifesto that it will introduce goods and services tax in the range of 12-14 percent,' recalled Mukherjee, adding the proposed regime was a major step toward tax reform.

Mukherjee's remarks also came ahead of the meeting Wednesday of the empowered group of state finance ministers, led by West Bengal Finance Minister Asim Dasgupta, to thrash out all remaining differences over the implementation of this new indirect tax regime.

Last month, the finance minister had proposed a three-tier tax structure to the empowered group be applied at the state and federal level in equal measure.

During the first year of the new regime, the federal levy on essential items was proposed at 6 percent, for other items at 10 percent and for services at 8 percent. Similar quantum of levy was proposed for states.

In the second year, the standard rate for goods at federal and state levels was proposed to be reduced to 9 percent each, while the rate for essential items and services was proposed to be retained at 6 percent and 8 percent each, respectively.

From the third year on, a uniform rate was proposed not only for essential items, but also for goods and services at 8 percent each at the federal and state levels. The finance minister had also assured that no state would lose out under the new regime.

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