The Prime Minister, Dr Manmohan Singh, has asked states to embrace the Goods and Services Tax from the next fiscal, saying replacement of most indirect taxes by this will help in greater revenue mop-up.
Earlier this week, the Centre proposed three different rates – 20 per cent for goods, 16 per cent for services and 12 per cent for essential items – under GST.
“Reform of tax structure and tax administration is another important step in resource mobilisation. The GST is especially important in this context and I would urge the Chief Ministers to give full support to the effort to implement GST with effect from April 1, 2011,” Dr Manmohan Singh said at the National Development Council meeting here on Saturday.
The GST would replace excise and service tax at the central level and VAT at the state-level.
The PM’s statement comes at a time when doubts have been voiced by many NDA-ruled states over the implementation of the GST from April 1, 2011. The introduction of new indirect tax regime has already been delayed by a year due to differences among the st ates and the Centre.
Most chief ministers were present at the NDC meeting called to review the progress of the 11th five-year Plan.
