FM confident of ironing out differences over GST soon

The Centre today said it was confident of reaching an amicable solution with the states on the differences over the proposed Goods and Services Tax (GST), which is now certain to miss the April deadline for its rollout.

"I am confident about the competence and efficiency of our people who are engaged in the discussion with the state governments to find an acceptable solution, so that we can arrive at a decision as early as possible (on GST)," Finance Minister Pranab Mukherjee said at the Central Excise Day here.

With states and the Centre differing over the structure of the proposed Goods and Services Tax, which will replace most of the indirect taxes at the Centre and the state level, the deadline of April 1, 2010, for the new system will most likely be missed.

Yesterday in the Rajya Sabha, Mukherjee had said the state finance ministers have stated that GST cannot be implemented from April this year as envisaged.

Mukherjee would meet the state finance ministers in early April to discuss the implementation of GST.

In his speech today, the Finance Minister said, "There are problems ahead, and it is naive to think of success without hurdles. Ours is a federation and each state has a say about the different aspects of the GST model."

While the empowered committee of the state finance ministers has suggested two main tax rates for goods, besides a special rate for precious metals and an exemption list, the Centre wants only one rate for goods under GST.

The Finance Minister said GST is the most important reform in indirect tax administration. He said constitution will be amended for the purpose of GST.

Under the present system, the Centre cannot impose sales tax and the states are not allowed to impose services tax. Under GST, both the Centre and the states will tax goods and services from manufacturing to sales stage.