GOVERNMENT NOTIFICATIONS
GST Implementation Likely by Mid-2015
State finance ministers are expected to thrash out the contours of the GST structure at a meeting this week. The finance ministry is keen on having a neat structure for the new tax, without wide distortions.
"The structure of GST should be such that it does not defeat the very purpose of having a GST," the finance ministry official said. Officials from both the Centre and the states have also begun work on the GST law. The constitutional amendment to allow the Centre to tax goods and states to tax services will have to be ratified by a two-thirds majority in Parliament and by at least 15 state assemblies.
The government is keen to tie up both by the winter session so that the process of implementing GST can start.
States have reservations on the inclusion of petroleum products within the GST framework as also a few taxes such as entry tax.
They also want an assurance from the Centre on compensation for any revenue loss on account of the switchover to GST. As a pre-cursor to GST, the Centre and states had agreed to phase out central sales tax (CST) — collected by the Centre and distributed to the states — from April 2007 over three years. Consequently, the CST rate was reduced to 3 per cent and then to 2 per cent.