Pranab proposes Goods and Services tax, both at Centre and State level

Finance Minister Pranab Mukherjee has proposed to have Goods and Services tax , GST, at the central and state level from April next year. Addressing the empowered Group of Ministers in New Delhi yesterday, Mr. Mukherjee also called for a three-tier structure for the implementation of GST.



During the first year of introduction of the new indirect tax regime, the central government will keep the tax on essential items at 6 percent. The tax on other items will be at the standard rate of 10 percent.

For services, the levy would be 8 percent. He added that the states too would impose a similar quantum of tax under the three categories, while the structures would be eventually merged.
AIR correspondent adds that all central and state taxes like excise, value added tax (VAT) and service tax will be rolled into GST once the new regime comes into effect. We have tax expert Ved Jain's comments on the proposal:
The proposal will help the economy in a big way in 2011, its efficiency may benefit to all those who to be the part of the regular system and who are complying. It will invite more transparency and may also in reducing cascading effect of taxation which will take place when the boost takes way.