As the finance ministry treads rather cautiously towards rolling out the goods and services tax (GST) by April 1, 2010 it seems to have worked out a preliminary process plan which will make it easier for the tax to be brought in effect.
According to top finance ministry officials, willing states are likely to kick off the process for making legislations to allow the centre and the states to make possible parallel taxation of goods and services once the Finance Bill for the current fiscal is passed in Parliament.
"As per the dual tax regime that has been announced for GST, there will be a central stream for taxes and a states stream for the same taxes. So, in order to allow this model of taxation both the centre and states will have to make policy changes. Once the policy is in place the item list to be excluded, etc, can be finalised," the official said.
The union government would also have to make amendments to the constitution to provide for such a parallel structure of taxing goods and services, which does not exist as of now. According to government officials, the step by step plan is in place and the major policy initiatives will be taken up one by one over the course of the next few months.
"The amendments are a step towards the rollout. The changes will allow states to tax services and the centre to tax goods. However, partial GST (with only some states participating) is not a good idea as it will make things very complicated," said Pratik Jain, executive director, KPMG.
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