The Centre is making one last attempt to set off the unified goods & services tax (GST) system on schedule, on April 1, 2010. To smoothen the process, it would give the 13th Finance Commission, tasked with dividing tax revenues between the Centre and states, three more months, till December end, to submit its report.
The Commission does this job every five years on a Constitutional mandate, but this time it has a tricky task in hand. It is supposed to make allocations between the Centre and each state, assuming the implications of the new tax regime that will rewrite the division of the indirect tax corpus of close to Rs 2,70, 000 crore. The Commission, chaired by Vijay Kelkar, was supposed to submit its report by October 31, 2009.
A source in the Commission said a final decision on extending the deadline will be taken soon.
A finance ministry official also corroborated the position. ?The Finance Commission has been asking us to send the proposed GST rates. But since there is still no consensus on it, how can we send them any inputs? We have told them our position.?
While the Centre and states have agreed on a dual structure for GST, they are yet to decide on many crucial issues, such as the rates, the minimum threshold for the tax to be applicable and the commodities that would be exempt from it.
The Kelkar panel has made certain studies of its own, but it still has to be informed the final rates agreed upon by the empowered committee to estimate the kind of compensation that states would require. ?The Finance Commission?s calculations may not be very useful, as revenue-neutral rates for GST can be anywhere between 6% and 20%?, a ministry official said.
The chairman of the empowered committee, Asim Dasgupta, had said, ?We are making our best effort to converge on GST. It would then be sent to the 13 th Finance Commission. We are conscious that the deadline for it to submit its report is October 31, 2009.?