GST implementation faces fresh hurdle

The finance ministers of state governments rejected a draft bill to amend the Constitution for introducing a pan-India goods and services tax (GST) regime from the next fiscal year. The reason for this deadlock is not the GST rates but the role of the Union Finance Minister on the general council body.

GST - FAQ

HOW WILL THE GST WORK?

The GST is an indirect tax that would replace existing levies such as excise duty, service tax, and value-added tax (VAT).

Both the states and the federal government would impose the tax on almost all goods and services produced in India or imported. Exports would not be subject to GST.

For the first two years of operation, the proposal is for two rates both at the central and state levels, converging to a single rate in the third year.

Producers would receive credits for tax paid earlier, which would eliminate multiple taxation on the same product or service.

Direct taxes, such as income tax, corporate tax and capital gains tax would not be affected.

Govt to miss April deadline on GST rollout

The UPA government’s proposed comprehensive indirect tax reform, goods and services tax (GST), will miss its scheduled rollout from April 1, 2010, a temporary setback to creation of a unified national market for goods and services in the country. "Because of the difficulties in passing the required constitutional amendment bill in the budget session , it will not be practical to introduce GST on April 1, 2010 . New dates for GST implementation will be decided in April," Chairman of the Empowered Committee of State Finance Ministers and West Bengal finance minister Asim Dasgupta said after an hour-long meeting of the panel with the union Finance Minister Pranab Mukherjee. Dasgupta’s admission is a clear indication that the implementation of the new regime may be postponed by an year to April 1, 2011, as a number of states may not be willing for even a mid-year roll-out.