While the street was hoping for a clear roadmap with timeframes to implement the much-awaited goods and services tax (GST), P Chidambaram said that a draft bill on GST will be presented in the Parliament in next few months.
GST seeks to replace all the indirect taxes like central sales tax, state-level sales tax, excise duty, service tax and value-added tax (VAT) with a single and uniform tax rate across the country.
It was expected that FM might set April 1, 2014 deadline for the implementation of the new tax regime. The first deadline for GST was set for April 1, 2010 and the second was April 1, 2012, however it missed both.
However, he has set aside Rs 9,000 crore in the Budget for compensating state governments in case of any loss due to the change in tax structure following the implementation of the goods and services tax (GST). Experts feel this move raises the possibilty of GST becoming a reality ahead.
Last year, a negative list regime was introduced which widened the tax base by bringing in more services under the tax net; this was seen as a pre-cursor to GST.
According to industry body FICCI, when implemented GST will contribute a total of two percent to the gross domestic product (GDP).