The Hindu Business Line : Panel to look into non-VAT items’ treatment under GST

The joint working group on goods and services tax (GST) has been mandated to consider how non-VAT items such as petroleum products and alcohol should be treated under the proposed GST regime.

“This is one of the terms of reference for the joint working group. Besides, the group will be required to consider the issue of treatment of exempted goods and services in a GST regime,” a Finance Ministry official said.

The group, which is to meet on Friday, had been constituted by the Empowered Committee of State Finance Ministers on VAT and comprises senior Finance Ministry officials representing the Centre and Secretaries of Finance/Taxation representing the States.

The group will study the various models of GST existing globally and identify the possible models for introduction of GST in India and assess their suitability to the country’s federal structure.

It will present its findings to the Empowered Committee, which will take a final decision on the right model.

The Centre has already announced intent to introduce GST by 2010.

Dr Parthasarathi Shome, Advisor to the Union Finance Minister, is a convenor of the group. Mr Satish Chandra, Member Secretary of the Empowered Committee on VAT, is also a convenor. Official sources said that the group has been asked to suggest a model for the base and rate structure of GST. It has been asked to design a model that is “revenue fair” with sufficient growth of revenue to the Centre and to every State, and has been told that the interest of North-Eastern States and union territories have to be specifically kept in mind.

The group, which has been given four months to submit a report, will examine various models and see the manner in which the power of levy, collection, and appropriation of revenue should be vested in the Centre and the States by looking at the pros and cons of various models.