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State governments concerned about goods and services tax regime: Sushil Modi

August 20, 2011 - New Delhi

The central government has to address the concerns of state government on the Goods and Services Tax (GST) regime, said Bihar's Finance Minister Sushil Modi.

Participating in a meeting of state finance ministers that was chaired by Union Finance Minister Pranab Mukherjee here on Friday, Modi said: "Mainly, we discussed the Constitutional Amendment Bill and states have expressed their concerns about GST (Goods and Services Tax) compensation. All in all, the discussion took place in a positive environment."

The members of the empowered committee would be going on a tour of four countries from September 7 to study the GST regime prevailing there.

The central government has introduced a bill to Usher in a nationwide GST, which is intended to usher in a uniform market for goods and services, cut business costs and boost government revenues. But several states and the opposition Bharatiya Janata Party have resisted the proposal.

The GST is an indirect tax that would replace existing levies such as excise duty, service tax and value-added tax. The states and the government will impose the tax on almost all goods and services produced in India or imported. Exports will not attract GST.

The GST will lower the average tax burden for goods and services companies that now pay "cascading" taxes on top of taxes through the production process. Reducing production costs will make exporters more competitive.


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