Centre may drop the idea of granting states equal powers

The Centre may drop the idea of granting states equal powers to levy indirect taxes as part of roll-out of a single tax rate regime. The Finance Ministry had in April sought the Law Ministry’s opinion on granting states such a power, but the idea seems to have been shot down.

Under the present disposition, states enjoy powers to legislate on items that form part of the Concurrent List, but the Constitution provides for the Centre’s opinion to prevail in case of any conflict.The Finance Ministry had explored the feasibility of introducing a Fourth List (Union List, State List and Concurrent List being the other three) that gives both the Centre and states equal taxing powers, as currently the Centre cannot impose indirect tax beyond manufacturing and states cannot levy Service Tax.