Mumbai: State governments have approved the introduction of a combined goods and services tax from 2010, both at central and state levels, which would reduce the burden on industry.
The official committee on Value-Added Tax has favoured a dual structure for Goods and Service Tax (GST) when it is introduced on 1 April 2010.
The committee comprising state finance ministers is agreeable to the idea of a dual structure - a central GST and a state GST, its chairman Asim Dasgupta told reporters.
Within the framework of GST, there would be more than one slab of tax for goods, but a single rate for services at the state level. At the central level, the rates will be decided by the union government, Dasgupta said, adding that they are likely to be on a similar pattern.
"We will ensure there is no double taxation," he said, adding the proposed GST structures would help trim the present "cascading effect" of taxes, and benefit industry and consumers.
"We accept the recommendations (of the panel)," said Dasgupta, also the finance minister of West Bengal.
The empowered group of state finance ministers on VAT would send its recommendations to the centre next month after the state finance ministers give their views in writing, he said after the panel''''s meeting here.
"After getting the written viewpoints, we will finalise the report. But we hope to send the report to the Government of India by the month of December," he said.
Like VAT, there would be set off - that is amount of tax paid on inputs would be reimbursed - at both the central and state levels.
GST at the state level will subsume as many taxes on goods and services as possible and feasible, he said.
The panel was set up by finance minister P Chidambaram for introducing a national GST by merging all levies on goods and services from 2010.
The panel has suggested that the central government should combine levies like excise duty and service tax into a single federal GST, while states need to merge value-added.