Roadmap for GST

1. Introduction
In view of federal structure of governance in India, there is multiplicity of taxes on goods and services. Excise duty on manufacture, customs duty on imports/exports and service tax on services are levied by Central Government, while sales tax (State Vat), Entry tax/octroi and duty on liquor are levied by State Government. Besides these, there are plethora of taxes like cesses, surcharge, stamp duty, entertainment tax, road tax and what not. Such multiplicity of taxes distort the tax structure and brings in complexities. Reforms in taxes is of course a continuous process. Cenvat (that time it was termed as ‘Modvat’) was introduced in 1986 in Central Excise to avoid cascading effect of excise duties. Introduction of State Vat started in 2005 and now most of the States have implemented State Vat. GST is a logical consequence of State Vat. Idea of national GST was first mooted by Kelkar Task Force in 2004. A task force was formed under Chairmanship of Shri Vijay Kelkar on Implementation of Fiscal Responsibility and Budget Management Act. The Kelkar Committee submitted its report in July 2004. The Committee strongly recommended fully integrated ‘Goods and Service Tax’ (GST) on national basis. Full integration of goods and service tax will obviously take considerable time, as it can be achieved only after political consensus is achieved. However, a beginning was made by proposing to make credit of service tax and excise duty inter-chargeable. The then Finance Minister Shri P Chidambaram, in para 148 of his budget speech on 8-7-2004, stated as follows, ‘I propose to take a major step towards integrating the tax on goods and services. Accordingly, I propose to extend credit of service tax and excise duty on goods and services. Accordingly, I propose to extend credit of service tax and excise duty across goods and services’. To give effect to this proposal, Cenvat Credit Rules, 2004 were issued and made effective from 10-9-2004. Empowered Committee for GST - The task of designing and implementing GST was taken up Empowered Committee of State Finance Ministers which had also designed the State Vat. The Empowered Committee had appointed various working groups and also had various meetings to discuss issues relating to proposed national GST. Basic idea of GST considerably diluted - When it was initially proposed as a national GST in 2004, it was projected as a solution to all ills of taxation. It was envisaged that there will be a simple single point GST. All Central and State taxes will be merged in national GST. In short, it was projected as a six lane super highway of taxation. Over the years, basic idea of ‘one single tax’ has been considerably diluted and various compromises have been made. The ‘Empowered Committee of State Finance Ministers’ was holding numerous meetings and trying to sort out various issues. Outside public and taxpayers only had some vague idea how GST is proposed to be implemented, through unauthenticated press reports, some study reports etc. Release of first discussion paper - It appears that some basic ideas about way to implement GST have crystalised. First discussion paper has been released by Empowered Committee of State Finance Ministers on 10-11-2009. Report of task force on GST of Thirteenth Finance Commission – Subsequent to release of first