GST: Exempted list likely in October

Panel of state finance ministers meets to discuss implementation of the new regime.

The empowered group of state finance ministers is likely to finalise the list of exempted items under the proposed goods and services tax (GST) in the first week of October. The group, which met today, largely resolved the differences over introduction of the new regime with certain states requesting the committee to discuss the issue with traders in their states and take their suggestions on board.

The Union government is keen to stick to the scheduled date of April 1, 2010, for introducing GST, which will replace excise duty and service tax by a composite tax regime.

“Most states have come around to accepting the introduction of GST,” said West Bengal Finance Minister Asim Dasgupta, who heads the panel. He said the committee had conducted meetings with traders in different states when value-added tax (VAT) was introduced in 2005.

Dasgupta said only one state had doubts on the issue but it had also come around. He did not name the state. Tamil Nadu Chief Minister M Karunanidhi had earlier written to Prime Minister Manmohan Singh expressing his reservations over the new regime.

He said the meeting also discussed whether there should be a dual or a single structure for GST. The panel had also overseen introduction of VAT.

During the meeting, it was also decided that the states would not review the current sales tax rates on aviation turbine fuel (ATF) as of now. The troubled aviation industry has demanded reduction in the levy. “The mood of the states is not to review the (sales tax) rates of ATF,” Dasgupta told reporters when asked if the states would lower sales tax rates on the fuel as global crude prices had come down drastically.

Dasgupta said the states had asked the Centre certain questions on ATF but had not got a response so far. The states do not want the Centre to bring ATF in the declared goods category as the move will cap the sales tax rate at 4 per cent.

The aviation industry is demanding a cut in tax rates for ATF, which constitutes 40 per cent of their operating costs.