GST update

With the Centre and states sorting out most differences on the goods and services tax, the movement of goods and services across India is set to be streamlined with a single tax structure replacing most of the indirect taxes such as central excise, service tax, VAT, purchase tax and surcharges.
Its implementation is likely to bring down the overall burden on consumers significantly, as the total tax—both at the state level and the Centre combined—is expected to be lower than 18%. Currently, all indirect taxes on any goods and services add up to more than 30%. Rollout of the tax is expected to boost revenues and economic growth.
GST was scheduled to be implemented from April 1, 2010, but missed the deadline due to lack of consensus among states who were worried about losing autonomy on taxation issues. Since then it has missed two other deadlines and experts say they expect its implementation by 2014. Approval of states is important as rollout of GST requires a constitutional amendment with at least two-thirds of the members of Parliament voting in favour in both the Houses.
“It was a satisfactory meeting and because of the Centre’s positive approach on issues related to GST a consensus seems to be on the cards,” Modi said, while lauding the effort of the Union finance ministry to evolve a consensus.

Modi’s meeting with Chidambaram was attended by Unique Identification Authority of India (UIDAI) chairman Nandan Nilekani and Revenue secretary Sumit Bose. Giving details of his discussion with the FM, Modi said Chidambaram was flexible on issues such as fixing of tax slabs, rights of states to impose tax in case of calamities and other emergencies and an appropriate redressal mechanism in case of disputes between states. “This will help states and the Centre arrive at a consensus on all GST issues,” the Bihar deputy CM said.
Modi indicated that the Centre may also agree to a special package for states for implementing GST and some announcement benefitting the small traders to attract them to the GST network. This is likely to pacify most of the BJP-ruled states that were opposed to the reforms on the ground that it will impact small traders besides adversely affecting their revenues.
The report of Parliament’s standing committee on finance, which is reviewing the Constitutional Amendment bill needed to implement GST, is awaited.