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Government Unveils Its Proposals for 3 Tier GST System

Neha Sood, Wednesday 21st July 2010


The GST or the Goods and service tax is a part of the proposed tax reform by the government and today the government announced a three tier working process for the same. The GST is very specifically aimed at break down the process of indirect tax procedure.


The latest proposal on GST is to make it three rate structure where the goods and services along with essential commodities will be levied with different tax rates. It has been decided that the goods will be imposed with a 20 per cent tax and the services provided will carry a levy of 16 per cent. The essential commodities will only be charged with 12 per cent tax.


The taxes like VAT and service tax will be covered under the new GST rule which is expected to be implemented at the beginning of next financial year that is April 1, 2011. Once the new GST regime is implemented there will be varying rates of the goods and this dual nature due the GST will be countered by an average effective rate which is currently fixed at 15 per cent. Also the government has stated that the revenue from the GST will have to be shared equally by the states as well as the centre and is has also been assured to the states that they will be providing a flexible compensation amount as mentioned in the 13th Finance commission.

 
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