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Wednesday, Feb 08, 2006


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Manufacturing council prefers national value-added tax to GST

K.R. Srivats

New Delhi , Feb. 7

HOLDING the view that the current constitutional framework would not facilitate an early move towards a comprehensive all-India level Goods and Services Tax (GST), the National Manufacturing Competitiveness Council (NMCC) has made a case for a national value-added tax (VAT) that would run in parallel at both the Central and State levels.

Such an approach has been suggested in the final draft of the paper on national manufacturing strategy prepared by the NMCC. The Council has said that this would achieve the same objectives of the GST.

This route was being preferred to the comprehensive tax on goods and services, which, according to the NMCC paper would be difficult to materialise quickly under the given Constitutional framework.

Stating that the broad shape of the indirect tax reform was clear, the NMCC has in the paper said that the indirect tax reforms would perhaps work only if all the exemptions - product specific exemptions, SSI-exemptions and location-based exemptions - are terminated over a period of time.

The NMCC paper has said that there should ideally be an all-India combined GST with service sector taxation integrated into the VAT framework, instead of being a tax on turnover. The Council has also said that whenever the comprehensive GST was accepted, this should be accompanied by a withdrawal of all other taxes.

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