Centre opposes states' two rates GST structure

Differences have emerged between states and the Centre over the GST rates structure, further strengthening apprehensions that the new tax regime would miss April 1 implementation target.

The Centre today opposed two rates suggested by states for goods under the proposed goods Good and Services Tax (GST).

"There should be a single rate of SGST (state GST). A two rate structure of goods would pose problems," the Union Finance Ministry said in its comments on the discussion paper on GST mooted by the Empowered Committee of State Finance Ministers.

The empowered panel has proposed to adopt a two-rate structure -–a lower rate for items and goods of basic importance and a standard rate for goods in general.

It also suggested a special rate for precious metals and a list of exempted items.

However, the Revenue Department said that a two-rate structure for goods would lead to more taxes on raw material and less taxes on finished goods.

The structure would also lead to demand of two rates on services which are currently taxed at a single rate.

The empowered panel has proposed a single rate for services under the GST. The Revenue Department said that different rates for goods and services would imply that the distinction between goods and services should continue.

The department also differed with the empowered panel proposal on keeping alcoholic beverages and some petroleum products out of GST.