IN A FIX
New Delhi, Dec. 5 (PTI): Failing to reach a consensus on constitutional amendment needed to roll out the goods and services tax (GST), the state finance ministers have decided to drop it from the agenda of their meeting tomorrow. They will instead deliberate on the structure and rates of the proposed indirect tax system.
The constitutional amendment to implement GST is not there on the agenda of the empowered committee of state finance ministers meeting on Monday, a key source said.
The dropping of the crucial issue will further delay the introduction of GST, which is likely to miss the deadline of April 1.
The amendment is needed because under the current scheme of things the Centre cannot impose tax beyond manufacturing and states cannot impose service tax.
The state finance ministers will discuss the GST structure, the rates and the compensation on central sales tax.
Central sales tax — a levy on the movement of goods from one state to another — was reduced from 4 per cent to 3 per cent in 2007-08 and to 2 per cent in 2008-09 after the introduction of value-added tax (VAT).
In July, finance minister Pranab Mukherjee had proposed a three-rate structure for GST, which will simplify the indirect tax regime. Under this, goods will attract 20 per cent levy, services 16 per cent and essential items a concessional 12 per cent.
The state finance ministers had been discussing the constitutional amendment in their last few meetings but they failed to reach a consensus, as states and the Centre stuck to divergent views. There were disagreements among states, too.
GST will subsume indirect taxes such as excise duty and service tax at the central level and VAT on the states front, besides local levies.
A draft constitutional bill proposed by the Centre has suggested a council chaired by the Union finance minister with states as members to make changes in GST.