The stalled dialogue between the Centre and states on the structuring of the Goods and Services Tax (GST) would soon be revived with the empowered committee of state finance ministers getting a new head.
Finance minister Pranab Mukherjee will meet state finance ministers on July 18 to discuss ways to end the impasse over the proposed tax reform. In the meeting, a new chairman for the state ministers? panel would also be appointed.
Earlier, Bihar deputy chief minister Sushil Modi declined to accept the post, offered to him by Mukherjee.
GST will replace the multitude of central and state indirect taxes and create a common market across India for goods and services. Indirect taxes such as excise duty and additional excise duty, service tax, CVD, all surcharges and cesses, VAT, CST, luxury tax and entry tax will be subsumed under GST. This would lower prices and remove distortions, besides simplifying the tax regime.
Industry chambers are in favour of early introduction of GST. It will be the largest reform since the industrial de-licensing of 1991. According to Vijay Kelkar, who headed the Thirteenth Finance Commission, it could add $500 billion to India?s GDP. However, the road to GST, India?s most ambitious indirect tax reform, could turn out to be longer. This is because there is a slim chance of the requisite number of state assemblies endorsing the Constitutional Amendment Bill for this purpose this fiscal.
While BJP-ruled states continued with their objection to GST, Bihar, ruled by the BJP-JD(U) alliance, has come out in full support.