Dated:- 22-7-2010 – PIB Press Release Dated 21-7-2010 Following is the text of the speech of Finance Minister, Shri Pranab Mukherjee delivered at the meeting of the Empowered Committee of State Finance Ministers, here today: Dr. Asim Dasgupta, Chairman, Empowered Committee; Members of the Empowered Committee, senior officials from the Department of Revenue and CBEC and officials of the State Governments, It gives me great pleasure to welcome you this afternoon to what I perceive as a very significant link in the ongoing dialogue on the introduction of the Goods and Services Tax (GST) in the country. We have worked with great perseverance and industry over the last 3-4 years to clear the way for the launch of this momentous reform in the realm of indirect taxes. Given the size and complexity of our economy and our deep commitment to the values of pluralism, federalism and democracy it would not be an exaggeration to say that this dialogue has moved at a satisfactory pace. Since the del
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d further discussion. In its meeting held on the 21st of May, 2010 at New Delhi, the Empowered Committee deliberated further on these issues and chose to leave final decisions on many to the Government of India. In the light of this development, I have comprehensively reviewed the position with my team. Some of our decisions have already been shared with you this morning. I will elaborate these further. Before I go into that, let me break good news on an issue that has caused considerable anguish to the States and hence been raised repeatedly in the run up to this juncture. This is the issue of CST compensation. I am glad to inform you that the Government of India has decided to fully compensate the States for their revenue losses on account of CST reduction during the year 2009-10 and to release the balance outstanding amount to the States immediately. I am now waiting for Empowered Committee's recommendations on the CST compensation formula for the year 2010-11. I am confident th
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kh of turnover per annum or ₹ 1 crore per annum. Of course, we must not lose sight of one of the critical deliverables of GST viz. that it should result in considerable simplification for small dealers so that compliance is easy and assured. One measure that would immensely facilitate simplification is the use of Information Technology so that physical interface between the taxpayer and the administration is minimized. Earlier today, you have had the benefit of listening to a presentation by Shri Nandan Nilekani, Chairman, Unique Identification Authority of India wherein he has proposed a detailed roadmap and strategy for putting in place the requisite IT Infrastructure to handle work related to GST. Since this infrastructure needs to be in place well before the actual introduction of GST in April next year, decisions have to be made with great alacrity and speed. In order that no time is lost, we have proposed the constitution of an empowered Group chaired by Dr. Nilekani with j
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s been the Centre's considered view that the full potential of GST could be realized only if we adopt a single rate structure with unification of the rate for goods and services. However, we recognize that this may not be feasible on the date of introduction of GST and requires a phased approach so that the transition is smooth and painless both for the taxpayer and the administration. As such, we are agreeable to the adoption of a dual rate structure for goods at the inception of GST. In the year of introduction i.e. 1st April, 2011, the Central Government proposes to keep CGST lower rate for goods at 6% and standard rate at 10%. The services will be charged at 8%. Our request to the States will be to consider keeping the same rates i.e. the lower rate for SGST at 6%, standard rate at 10% and services at 8%. This mutually supportive approach will ensure that we have a single rate for CGST and SGST in the range of 12 to 20% in the first year of GST introduction. The peak effective
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