The paper will provide some clarity on the structure of GST as states would want it.

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The empowered committee of state finance ministers will release the first discussion paper on the proposed goods and services tax (GST) on Tuesday, exactly five months before the Centre’s original target date for a nationwide roll-out of the tax.

The paper, to be followed by another technical paper on the indirect tax by Finance Commission Chairman Vijay Kelkar, will provide some clarity on the structure of GST as states would want it.

Finance Minister Pranab Mukherjee will meet the state finance ministers tomorrow to discuss GST before the Bill seeking constitutional amendment to the indirect tax structure is tabled in Parliament. The government may want to present it to the House in the upcoming winter session as it is running against time to meet the April 10, 2010, deadline though Mukherjee indicated recently that there might be a delay in introduction of GST owing to a lack of consensus among states on the likely structure of the proposed tax. The government would also have to resolve the issue of compensation to the states before it moves ahead with GST.

A constitutional amendment requires the approval of two-thirds majority in Parliament after which the state assemblies have to approve it. “The process cannot be completed in five months,” admitted a senior finance ministry official while stating that his ministry was in talks with the law ministry to speed up preparation of the Bill.

The discussion paper will detail how GST will be collected. It may not have GST rates or items to be covered under different slabs. The paper is expected to throw light on the treatment of sectors like real estate, education, health and items like petrol, alcohol and tobacco.

The Centre and the states also have to decide on who will administer the new GST. According to sources, it could be a joint body, with representatives from the Centre and the states. The Centre may, however, have its reservations on this.

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