'Considerable negotiations needed among Centre, states on GST'

'Considerable negotiations needed among Centre, states on GST' New Delhi: Noting that lot of work remains to be done in implementation of GST, Prime Minister's Economic Advisory Council (PMEAC) on Friday said introduction of the tax reform requires considerable negotiations among the Centre and State governments.

"While the desirability of the tax is not in doubt, introduction of GST (Goods and Services Tax) requires considerable negotiations, bargaining and preparatory work on both the structure and operation of the tax," PMEAC said in its Economic Outlook for 2012-13.

There are a number of measures which will have to be taken up before the GST is implemented, it said.

"These require negotiations between the central and state governments on the one hand and among the states inter se on the other," it added.

A Constitution amendment bill on GST is currently being scrutinised by the Standing Committee of the Parliament on Finance. After passage in Parliament, the bill has to be endorsed by the legislatures of half of the States.

While there has been a broad agreement that there will be a dual GST at central and state levels, several issues are yet to be resolved like finalising the tax rates and treatment of services with inter-state coverage.

Also, one of the contentious issues relating to the GST Bill is the mechanism envisaged to ensure compliance of the decisions by all parties concerned.

The GST regime, which will subsume most of the indirect taxes, was proposed in 2007 and was to be originally implemented from 2010-11 fiscal.

States are also demanding compensation for their revenue loss on reduction of the Central Sales Tax (CST), a precursor to implementation of GST.

Prime Minister Manmohan Singh on Thursday said GST implementation would send a powerful signal about economic reforms being on course.

PTI