Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: due date for vat payment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: form 3cd :: TDS :: VAT Audit :: ACCOUNTING STANDARD :: VAT RATES :: list of goods taxed at 4% :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company
 
 
« Service Tax »
 Recovery Of Tax Under Model Gst Law
 Income Tax officials hunt for Mumbai’s ‘ghost’ assessee
 GST delay to impact Budget
 If GST not rolled out by Sept, there won't be taxation in country, warns Jaitley
 India’s E-Service Tax Will Add To Foreign Content Providers’ Woes
 GST Council to discuss model laws, tax jurisdiction today
 Tax Invoice Under GST
 Insurance may fall under 12% tax slab in GST, from 14% service tax currently
 GST draft makes it must for companies to pass tax benefit to consumers
 To speed passage, Government plans GST Bills as money Bills
 No service tax on train tickets booked through IRCTC till December 31

Determining GST rates calls for cutting the clutter
November, 17th 2009

The discussion paper on GST, released by the Empowered Committee of State Finance Ministers last week, turned out to be a damp squib, disappointing industry and the Centre alike.

Other than the concept of integrated goods and service tax (IGST) for inter-state transactions, the paper offers very little no mention of classification of goods or an exempted list, no plan for phase out of exemptions, no measures to prevent deviation by states from agreed rates, no monitoring machinery, no mechanism for settling disputes and so on. The paper has only reiterated what we knew: that there will be a central GST (CGST) and a state GST (SGST).

And that on goods, there will be four rates at the state level a 0% for exempt goods, a nominal rate (perhaps 1%) for precious metals, a concessional rate for goods of basic importance, and a standard rate.

The paper has also proposed that states continue the exempted items list they have under value added tax (VAT) at least in the initial years. Effectively then, the SGST will be the current VAT with a new nomenclature. For services, the discussion paper has proposed a single rate.

The GST structure at the Centre is yet to be known. The Centre will perhaps make its mind known after the Thirteenth Finance Commission, chaired by Vijay Kelkar, comes out with its recommendation on GST.

No one disputes the compulsion driving a dual GST structure, although a single GST would have been ideal. Indias Constitution allows fiscal federalism, and asking states to give up their power to levy taxes is impossible.

However, given the experience with the implementation of VAT, a smooth rollout of GST will be challenging. A lot of work needs to be done. Amendment to the Constitution and enactment of a GST Act at the Centre and states may be the easiest of the tasks ahead.

Most importantly, the tax base need to be finalised. That is crucial for finalising tax rates at the Centre and state level. The larger the base and fewer the exemptions, the lower can be the rates.

And, as Central Board of Excise and Customs member Sumit Dutt Majumdar observed at a recent PHD Chamber conference in New Delhi, exemptions need to be brought down to the minimum in a phased manner, from a level of more than 300 at present. Scrapping exemptions in one stroke is impossible. Pruning the list requires consensus among states, a political decision. Moreover, the list needs to be common across states to prevent trade diversion.

Alongside, the states must decide on a common threshold for exemption from tax. Under VAT, the threshold varies from state to state. In the North East, where businesses are small in size and fewer in numbers, the threshold is Rs 2 lakh while in many others, it is Rs 5 lakh. The discussion paper proposes to raise this to Rs 10 lakh. Will all states come on board? Unlikely, unless they are compensated for loss of revenue.

Thats where the Finance Commission would come in. There is also demand that the threshold limit at the Centre for excise (currently Rs 1.5 crore) and services (Rs 10 lakh) be raised. Again, that is a difficult decision, given the revenue implications. The CBEC has rightly said that it does not want a hasty decision.

These concessions are being sought on the pretext of easing the burden for the SME sector. But as Mr Majumdar noted, the solution lies in simplifying procedures, rather than in giving concessions.

These include common registration and return forms for CGST and SGST, e-filing and doing away with physical verification. Schemes for composition/compounding too may find very few takers only those who do not want to avail credit for taxes paid on inputs.

States must agree to keep the threshold low and the list of exempted item small to bring all into the tax net, allow better use of credit for tax paid on inputs and reduce cascading effect.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Content Management System developers CMS developers Content Management Solutions CMS Solutions CMS India Content Management System India CMS development India Website CMS Website Content Management India Portal CMS India CMS Outsourcing CMS Vendor Complete CMS Custom CMS Services

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions