Housing, rail should be under GST: Kelkar

The Thirteenth Finance Commission on Monday suggested that activities like housing, construction and railways should be included in the proposed Goods and Services Tax to increase the tax base and enhance collections.

"I would urge that the construction and housing sectors be included in the GST tax base, either immediately or during a subsequent phase," said Commission Chairman Vijay Kelkar

while speaking at a seminar on GST organised by Assocham.

Construction sector is a significant contributor to the national economy and housing expenditure dominates the personal consumption expenditure so the two sectors would increase the tax base, he added.

"Another possible step to expand the GST tax base will be the inclusion of the rail sector," he said.

The inclusion of the the rail sector in the tax regime which will do away with most of the indirect taxes, should be done if the government want to provide a level playing field to road and air transportation sector.

The inclusion will also ensure that all inter-state transportation of goods can be tracked through the proposed IT network and in fact the railways itself would benefit from the inclusion, Kelkar said.

The government is preparing a roadmap for GST which has to be implemented by April 1, 2010.

However, there is no full consensus on the rates of GST and the structure but the government has made it clear that there would be a dual tax structure.

This means there would be two components of tax, one called the Central GST and the other the State GST.