Finance minister pushes uniform GST rate structure

Union finance minister Pranab Mukherjee today called for uniform sales tax rate across states, in order to realise the full potential of the goods and services tax (GST).

Mukherjee said the central government would keep GST for goods lower at 6 per cent with a standard rate of 10 per cent while services will be charged at 8 per cent.

Addressing a meeting of state finance ministers in New Delhi, he said, the central government's considered view is the adoption of a single rate structure with unification of the rate for goods and services.

However, he said, this may not be feasible on the date of introduction of GST (1 April 2011) and requires a phased approach so that the transition is smooth and painless both for the taxpayer and the administration.

While the centre is agreeable to the adoption of a dual-rate structure for goods at the inception of GST, the finance minister asked state governments to consider keeping the same rates, ie, the lower rate for SGST at 6 per cent, standard rate at 10 per cent and services at 8 per cent.

He said a mutually-supportive approach would help ensure a single rate for CGST and SGST across the country in the range of 12 to 20 per cent in the first year of GST introduction. The peak effective rate will be about 15 per cent, which will be quite acceptable to the trade and industry.