Goods and Services Tax likely to be introduced soon: Govt

     The government has stated that the proposed new indirect tax regime, Goods and Services Tax (GST) is likely to be introduced shortly. The central government in consultation with states had decided to phase out Central Sales Tax (CST) in order to facilitate introduction of GST and to give compensation to the states for revenue loss on this account.
     GST, the proposed new indirect tax regime and one of the biggest taxation reforms in India will replace existing state and federal levies such as excise duty, service tax and value-added tax (VAT) and will integrate State economies and boost overall growth. Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions. The industry is awaiting its introduction, as GST would remove the cascading effect, boost revenues and aid economic growth.

     In a leg up to the early implementation of the goods and services tax (GST) reform, the government is presently engaged to address states’ concerns over its design and compensation for revenue loss to ensure early implementation of this singular tax reform. States are insisting that petroleum be kept out of the purview of the GST are also opposed to subsuming of entry tax within GST, especially that entry tax which is in lieu of octroi. States are also upset with the centre for non-payment of Central Sales Tax (CST) compensation from the year 2011-12.

     The previous UPA Government had brought a Constitutional Amendment Bill to introduce the GST, but failed to get it through, owing to the lack of consensus. Since the basic framework is ready, new Government does not require much effort to re-introduce the Bill. Further, it would not have a problem passing the Bill, given its strength in the Lok Sabha.