States VAT panel meets tomorrow to look into PCs GST model

Written by Sanjay Jog | Mumbai | Updated: Jan 21 2009, 04:53am hrs
Although P Chidambaram may no longer be heading the finance ministry, the empowered committee of state finance ministers is scheduled to meet this Wednesday to discuss his views on the proposed goods and services tax.

Chidambaram before his appointment as the home minister had called for a uniform GST rate at the national level. He had raised questions over the authority responsible for GST collection and had pitched for a single point collection of the tax.

He had also wanted to clear guidelines on the threshold limit for GST. At present, VAT is collected for income above Rs 5 lakh and for central excise income above Rs 1.5 crore.

Informed sources on Monday told FE , The January 21 meeting is quite crucial as the committee will discuss at length the former finance ministers views on its report on the implementation of GST.

Sources said that the empowered committee chaired by West Bengal finance minister Asim Dasgupta is expected to arrive at a consensus and rework its report which will be later submitted to the finance ministry. The panel is hopeful of finalising the model for the tax system by March this year, following which it will begin work on the rate structure.

GST, which is proposed to be introduced from April 1, 2010 is seen as a comprehensive attempt to solve problems that fragment markets in India and increase transaction costs. The dual GST model would subsume central excise duty, service tax and value added tax (VAT), and come with two tax rates: one that will be charged uniformly across the states and the other by the union government. The empowered committee will also review the latest position of VAT revenue, status of issues of C-forms and refunds.

Meanwhile, Parthasarathi Shome, former advisor to the finance minister and currently working as chief economist UK, would make a presentation on January 20 on VAT and GST in UK.