Common tariff code for goods next fiscal

NEW DELHI: States planning to unveil a common tariff code for classification of goods may now be able to operationalise it only in the next fiscal. Although the Centre has already done the groundwork needed for the code, states now want to impart some local element to it. The rollout was scheduled to begin this fiscal.

The new Harmonised System of Nomenclature (HSN), modelled on the central excise, customs and followed internationally, was discussed at the last meeting of the empowered committee of finance minister, sources told ET. India follows the eight digit HSN code that is primarily classification of goods for tariff purposes. The Centre wanted states to go in for a common return form, procedures and tariff code to give state tax administration a complete facelift and make it more efficient.

While the states have in-principle agreed to the Centre���s proposal, they want to introduce some local element as completely switching to the HSN will make it difficult to have deviation in rate of taxation of certain items. At present, there is certain level of uniformity in rates at which VAT is levied all over the country on most products; but there is none in forms, tariff codes and audit procedures.

Although the switchover was planned from the current fiscal, the process has been slightly delayed due to lack of concurrence.

This facelift of the states��� tax administration was a precursor to the unified goods and service tax that is expected to roll out from April 1, 2010. Sources said it may be difficult to introduce a new system in middle of a fiscal year as it could create confusion in the trade. Rollout from next fiscal would now be preferred, they said.

The HSN for state VAT has been prepared by the Central Board of Excise and Customs officials. State finance officials have examined it in detail and given their recommendations to the empowered committee. The committee at its meeting on May 5 also discussed the e-governance framework that is aimed at computerising the value added system in the country.