The government on Tuesday inched a step closer to the introduction of the Goods and Services Tax (GST) by tabling a Constitution Amendment Bill in Parliament that seeks to provide powers to the Centre and states to make laws for levying tax on supply of goods and services. Now, states are not allowed to tax services, while the Centre cannot tax sale of goods.
GST would replace a number of indirect taxes levied by the Centre and state governments, and was intended to remove cascading of taxes and provide a common national market for goods and services, said the Constitution (One Hundred and Fifteenth Amendment) Bill, 2011.
GST will subsume many taxes levied at the Centre, including excise duty, additional excise duties, excise duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, service tax, additional customs duty, special additional duty, central surcharges and cesses (excluding those applicable to income tax).
At the state level, it will subsume state value added tax/sales tax, entertainment tax (unless levied by local bodies), luxury tax, taxes on lottery, betting and gambling, tax on advertisements, state cesses and surcharges and entry tax, not levied by local bodies.
It proposes to keep crude petroleum, diesel, petrol, aviation turbine fuel, natural gas and alcohol for human consumption outside the purview of GST. States will be allowed to levy tax on inter-state movement of these goods.
Source :  Business Standard