The Union and state finance ministers would discuss scrapping the proposed one per cent tax on inter-state movement of goods proposed in the Constitution amendment Bill on goods and service tax regime. The removal of the 1% additional tax on inter-state trading is likely to come up for discussion at the empowered committee meeting chaired by Finance minister Arun Jaitley with the state finance ministers, apart from various vexed issues over distribution of adjudicating powers between the Centre and state indirect tax departments. After which the Constitutional amendment Bill on GST may come up for a discussion in the Rajya Sabha. With that the GST structure will improve considerably, although it is there only for two years, there will be some amount of cascading effect.
A committee had suggested that limiting the one per cent tax over GST to only those inter-state exchanges of goods for which there was a monetary consideration. This means that only inter-state trading of goods would draw this tax and not company-to-company transfer. States charge central sales tax on sales made outside their territory, which will not be available under the GST regime.
The idea behind the GST is to make India into a one common market to have a seamless transfer of goods and services, to prevent tax-on-tax, make goods and services cheaper and therefore provide to any person a very large markets that is one-sixth of world population.