The finance ministry has said that proposed Goods and Services Tax rate is likely to be higher than 12%, the rate suggested by the 13th Finance Commission. Revenue secretary Sunil Mitra on Thursday said the combined rate of the proposed dual GST would be higher than 12%.
The Finance Commission had recommended a rate of 5% for the Central GST and 7% for the states, though state governments are pitching hard for the combined GST rate to be above 16%.
The empowered committee of state finance ministers in its discussion paper on GST, unveiled in November last year, was silent on the rates. A few weeks ago, the Centre (the revenue department) came out with its views on the discussion paper, but it also chose to remain non-committal on rates.
GST was earlier scheduled to be implemented from April 1 2010, but the deadline had to be postponed by an year due to lack of consensus among the states and the Centre on issues like tax base and the rates. The Finance Commission had proposed a broader base for GST as it wants to subsume various levies like stamp duty on immovable property, parts of petroleum levies and purchase tax, which states want to keep outside GST.
The Centre and states are trying to introduce GST by April 1 2011. ?Finance Commission’s inputs on GST contribute to the ongoing discussions on the subject? said finance minister Pranab Mukherjee in Budget speech last week.The recent hike in excise duty rates from 8% to 10%, a partial rollback of stimulus, is also seen as a move towards GST as it aligns the excise and service tax rates. While the excise duty was hiked to 10%, service tax rate was kept stable at 10%. GST is expected to replace central taxes like service tax and excise duty and state levies like VAT, and sundry other local levies.
Direct tax fetches Rs 2.78 lakh cr in Feb
The government has mopped-up Rs 2.78 lakh crore by way of direct taxes till February this fiscal, still short of Rs one lakh crore from the revised target of Rs 3.87 lakh crore and only a month left to meet this target. The direct tax kitty was up 7.52% in the first eleven months of this fiscal against Rs 2.58 lakh crore in the same period last fiscal. During February, the growth in direct taxes, year on year was up 27.54%, giving enough hope to the government to mop up the additional over one lakh crore in just March this year. The tax collection during February stood at Rs 14,675 crore compared to Rs 11,506 crore, whereas during January, there had been negative growth of 19.84%.The direct tax kitty comprising personal income tax, corporate tax and wealth tax have faced pressure last year due to the slowdown in the economy.