The Centre on Monday indicated that it wants the inclusion of petroleum products and alcohol in the proposed goods and services tax regime (GST). The states have however expressed concerns over its implementation.
The centre also wants to include purchase tax, electricity duty and other local taxes in the GST regime and has set up a target turnover of Rs 10 lakh.
The decision paper was released by the Empowered Committee (EC) of state finance ministers on GST and the centre responded by saying that it wants uniform rates of taxes both at centre and the state levels.
The department of revenue also indicated that two different rates of GTS would causer problems in its implementation. The centre has agreed to continue the exemption on 99 items that were exempt from paying VAT.
The EC recommended multiple rates for taxing goods which is similar to the currently implemented VAT and uniform threshold of Rs 10 lakh for goods and services at the state level.
The differences between the states and the centre could further delay the implementation of the GTS. It has already been decided to post pone the implementation from the earlier decided date of April 1, 2010.
The finance ministry also prefers 'appropriate binding mechanism to harmonise the various important aspects of the GST like rate structure, taxation base, exemption between Centre and States.'
The centre is aiming to curb the state's tendency to change taxes subjectively while the states want to protect their 'fiscal autonomy' and want to have the ability to change tax rates.