States agree on dual GST rate – but some still demur

State chief ministers yesterday agreed to have two rates for the goods and services tax (GST) regime scheduled to be introduced from April 1, 2010 - a standard rate and a lower rate for essential items.

Value-added tax panel chairman and West Bengal finance minister Asim Dasgupta told reporters after a meeting of the empowered group of state finance ministers and officials of the union finance ministry in New Delhi that the states had reached a consensus on dual GST.

However, indications are that the union government intends to stick to a single rate for central GST. Dasgupta said he could not speak for the central government, but it would likely have a ''good deal of conformity'' with state-level GST.

''A consensus has been reached between state finance ministers regarding two basic rates of taxation. Some items will also be exempted from the tax and there will be another rate of tax for precious metals like gold and silver,'' said Dasgupta, chairman of the empowered committee of state finance ministers.

He added that some small and medium enterprises would also stay outside the ambit of GST. The exact rates have not been decided yet. ''A working group will be set up immediately and the report regarding constitutional amendment will be submitted in a month. It is a small amendment to empower states to levy taxes,'' Dasgupta said.

The joint working group will include representatives from the states and the centre, as well as the law ministry and the Central Board of Direct Taxes.