A shorter Negative List in the Offing under the New GST
The proposed GST is slated to have a shorter list of exemptions. The Finance Ministry and the Empowered Group of State Finance Ministers are working on a common list of exempted items and the consensus is to prune the list significantly. The indications are that the Centre's excise duty exemption list of around 300 items will be reduced to the states' value-added tax (VAT) list of close to 90. The current pruning, in fact, continues the process that has been on for some time. The exemption list which stood at 542 items in 2011 has gradually come to down 300 items.
The current consensus is to bring the exempted list of services significantly barring essential services like health and education. At present the negative list of services has 18 heads, including health care, education, goods transport agency, restaurants (non-AC) etc.
The negative list of States for Goods primarily consist of items like fruit, vegetables, salt, grain and coarse fabric etc . The Centre provides excise exemption to processed food and pharmaceuticals and a concessional rate to fruit-based items. Common items between Centre and states include bread, eggs, milk, vegetables, cereals, books and salt, which will continue to be exempted.
While the list of exemptions for both the Services and Goods are likely to get shorter, one is not clear about the prospects for services like health, education etc. and for goods like Petroleum where consensus is still being developed among the decision makers.