Work for GST implementation: PM to states

As the deadline of April 1, 2010, for introduction of proposed goods and services tax draws closer, Prime Minister Manmohan Singh on Tuesday asked the states to work towards expeditious implementation of the new indirect tax system.

"The states should work towards early implementation of the goods and services tax," the prime minister said at the conference of state food processing ministers in New Delhi.

He also asked the states to remove subjectivity in treatment and classification of food products.

The Centre and the states are yet to reach at an agreement for goods and services to be included in the GST regime.

The decision on a lower levy on food products and exemption to some of them is also yet to be taken.

GST will do away with most of central indirect taxes like excise and service tax  level, and VAT as well as subsume local levies like octroi and purchase tax at the state level.

The empowered group of state finance ministers, the apex body for carving out the contours of the GST, has decided about the levy having a dual structure -- one at the Centre and the other at the state level.

States have also decided to have two main rates for GST, besides a special rate for precious metals, while the Centre is yet to take a call on it. However, many states are not willing to subsume the local levy and also have a fear of losing financial autonomy.