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NEW DELHI: In what could dramatically change the service tax structure, states will demand power to levy tax on all taxable services along with the Centre under the proposed Goods and Services Tax (GST) that is to be implemented from April 1, 2010.

This will be in stark contrast to "paltry" services on which states were offered rights to charge tax as part of the compensation package to make up for the loss due to phase out of Central Sales Tax starting from this year.

The states will be levying tax on all taxable services concurrently with the Centre, official VAT panel Chairman Asim Dasgupta, who is finalising a report on GST, said.

Earlier, states were offered 44 services, mainly of local nature, to compensate them for phase out of CST -- a levy on inter-state trading of goods.

Since the purpose behind VAT and GST is to create common Indian market, CST distorts this aim and hence is reduced from four to three per cent this fiscal, to be ultimately eliminated by the time GST is proposed to come into existence.

However, states did not agree on these services because they were "paltry", Dasgupta said. "Because states are given a set of paltry items, states didn't agree. (Under GST) states will levy all taxable services, concurrently with the Centre," Dasgupta said.