Thaindian News

New Delhi, March 15 (IANS) India’s union cabinet Tuesday gave its nod for amending the constitution to introduce a uniform goods and services tax regime across the country by unifying all central and state levies such as sales tax and excise, officials said.

A meeting of the cabinet, presided over by Prime Minister Manmohan Singh, cleared the draft bill for introduction in parliament after the deadline to introduce the new regime was miseed twice due to differences between states and the central government.

The unified goods and services tax, however, will exclude some items such as petroleum fuels and liquor.

The new regime, which the government has been talking about for the past four years, was to come into force from April last year but the deadline was pushed by a year. Now the government hopes it can become effective April 1, 2012.

Industry has also decided to take up the matter. “We will go and meet state governments and try to convince them it is good for everybody,” said Harsh C. Mariwala, the newly-elected president of the Federation of Indian Chambers of Commerce and Industry (FICCI).

The deadline was missed twice as states, mainly those ruled by parties of the National Democratic Alliance (NDA), objected to certain provisions in the previous two draft bills, saying they sought to give the union finance minister undue veto powers.

The government, accordingly, proposed a Goods and Service Tax Council, chaired by the union finance minister with counterparts from the states as members, to take decisions based on consensus.

Even as the central government now maintains differences have narrowed down considerably, the BJP, which heads the NDA, has rejected the latest proposal as well.

In his budget speech last month, Finance Minister Pranab Mukherjee said he was proposing to withdraw excise duty exemptions on 130 items, mostly consumer goods, with a view to align the tax system with the proposed goods and services tax.

“There are 370 items that enjoy exemption from central excise. I propose to withdraw the exemptions from 130 of these items that are mainly in the nature of consumer goods. The remaining 240 items to be brought into the tax net when GST is introduced,” he said.

“The introduction of the direct tax code and the proposed goods and services tax will make a watershed. These reforms will result in moderation of rates, simplification of laws and better compliance.”