The Empowered Committee of State Finance Ministers was originally set up on 17th July, 2000 by the Government of India. Later on, it registered under Societies Registration Act in 2004. All the Ministers in charge of Finance/Taxation of all State Governments and Union Territories with legislatures, Additional Secretary (Revenue), Government of India and Member Secretary, Empowered Committee are the members of the Empowered Committee.
If the Value Added Tax (VAT) is considered to be a major improvement over the pre-existing Central excise duty at the national level and the sales tax systems at the State level, then the Goods and Services Tax (GST) will be a further significant breakthrough - the next logical step - towards a comprehensive indirect tax reform in the country.
The State-level VAT, has certain distinct advantages over the existing sales tax structure. The VAT provides full set-off for input tax as well as tax on previous purchases, and also abolishes the burden of several of the existing taxes, such as turnover tax, surcharge on sales tax, additional surcharge, special additional tax, etc. the overall tax burden will be rationalized.
The Empowered Committee, in consultation with the Government of India, had decided to have a technology based computerized system, viz Tax Information Exchange System (TINXSYS). The key objective of the project was to obtain information related to inter-State trade and prevent fraudulent transactions through spurious statutory forms and thereby tax evasion. With this objective in sight, a project proposal is prepared with an estimated outlay of Rs.32 crores. The 50% of this expenditure was to be borne by the Government of India and the remaining 50% by the States. The project commenced on 1st November, 2004 on a Build-Own-Operate-Transfer basis.
For introduction of VAT/GST, phasing out of CST is necessary as it is a distortion under the VAT regime. Hence, was also decided that the CST should be phased out till 31st March, 2010. As per the consensus arrived between the Centre and the State Governments, the rate of CST was reduced from 4% to 3% with effect from 1st April, 2007. Further, a notification reducing the CST rate from 3% to 2% with effect from 1st June, 2008 was issued. It was also decided to retain the 2% CST rate till GST is introduced.
Analysts expect Nifty to hit 8,000 if GST Bill fails in Monsoon Session(Source:Business Line)
Chairman & Finance Minister(West Bengal)