Even as the Empowered Group of State Finance Minister today released the much-awaited first discussion paper on Goods and Services Tax (GST), the implementation of the new indirect tax regime by the scheduled April 1, 2010 deadline looks like a distant goal.

The legislative and constitutional changes required have yet to be finalised. The states have yet to be brought on board on issues such as purchase tax and compensation. The states have raised concerns about the amount they would lose on account of phasing out of the Central Sales Tax. Also they are of the opinion they should be compensated for losses that they might incur during the implementation of the GST for the next five years. They also say the IT infrastructure required for the implementation of the GST is still not in place.

Indicating his apprehensions over the delay in introducing the new indirect tax regime, finance minister Pranab Mukheerjee said, “We are working on it (date of implementation. But first discussion paper has been released today. There will be discussion and deliberation. Now these are empowered group’s views. We will also look into it... and after that there will have to be amendments, legislation and constitutional. We shall have to arrive at a full-fledged picture. We have to keep that in mind.”

According to the recommendations by the empowered group in the draft discussion paper, there would be a dual rate structure — one levied by the C enter and the other by states. It has been proposed to subsume central levies like excise duty, additional excise duty, service tax, excise duty levied under the Medicinal and Toiletries Preparation Act, countervailing duty, special additional duty of customs, various surcharges and cesses.

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