Panel Discussion to Be Held on GST

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Aug. 15 – On August 19, 2011 the Empowered Committee of State Finance Ministers on the Goods and Services Tax (GST) will meet to discuss various issues related to the rollout of the ambitious indirect tax regime. The government is eager to launch the GST.

This will be the first meeting of the board under its new chief Mr. Sushil Modi. According to the chairman, the Empowered Committee will discuss such issues as IT infrastructure required for GST, CST compensation, and the Constitutional Amendment Bill.

While a Constitutional Amendment Bill for the GST rollout has been initiated in Parliament and referred to a Standing Committee, there are still some points which need to be considered first before moving further. These issues include provision for States to levy cess in cases of natural calamities, their autonomy in taxing matters, and concerns on powers of the proposed dispute settlement authority.

CST, a tax on inter-state movement of goods, was decreased from 4 percent to 3 percent in 2007-08 and additionally to 2 percent in 2008-09 after the introduction of VAT. The Centre has solicited all the states to file their payment claims for the last fiscal on account of a reduction in CST. The Centre plans to do away with CST in stages as it plans to realize the GST, a new indirect tax regime.

A total amount of Rs. 2,411 crore has been given to 10 states for loss of CST revenue in the fiscal year 2010-11.

The Empowered Committee has proposed that the Centre prepare a process for calculating compensation for the 2010-11 fiscal on the basis of the method followed for three financial years ending March 2010. For the time being, Chairman of the Unique Identity Authority of India and Empowered Group on IT infrastructure for GST held a meeting with Modi.

The two talked on an initiative for centralized IT infrastructure for GST across the states which can be used for VAT and will be accessible for GST when it is executed.

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