States to meet FM tomorrow on GST

With the deadline for introducing the Goods and Services Tax (GST) drawing closer, state finance ministers will meet Union finance minister Pranab Mukherjee here tomorrow to sort out various differences in this regard.

The proposed indirect tax regime that will replace most of the indirect tax levied by the Centre like excise and service tax and subsume state-levied taxes like VAT and octroi, is scheduled to be introduced by April 1, 2010.

The joint working group on GST, comprising officials from the Finance Ministry, Commissioners of commercial taxes in states and other officials met today on the subject.

The group will putforth its recommendations to the finance Minister at the meeting tomorrow.

Although the rates and the fine contours of the the new tax regime are yet to be finalised, one thing is known that there will be a dual structure -- one at the Centre and another at the States.

At the state level, there will be one standard rate, a lower rate for essential items and a rate for precious metals.

However, some states have reservations on doing away with the local taxes as that could impact their financial autonomy.

Also, there is a dearth of data on the services sector with the states which is causing problems in fixing the rates for services.