Narendra Modi mum on Ficci appeal for Goods and Service Tax
December, 20th 2011
Gujarat chief minister Narendra Modi did not oblige the FICCI national executive held for the first time in Gujarat and avoided comment on the Goods and Service Tax. The state has been opposing the new tax roll-out citing losses in revenue collection. The Centre is keen on GST but opposition from states like Gujarat, Tamil Nadu and Uttar Pradesh is a roadblock to the uniform tax system adopted by 165 countries.
FICCI president Harsh Mariwala sought Modi's co-operation on GST and liberalising the retail sector in the country. However, Modi did not respond to the appeal and restricted his speech to developmental initiatives taken by his state.
"The implementation of GST is crucial for the country. Various studies and have found that fears expressed against rolling out of GST are unfounded," Mariwala said during his speech. Regarding liberalising the retail sector in the country he said, "The move will help the economy, so we suggest the foreign direct investment in single brand retail to be raised to 100% and in multi-brand retail to be 49% if not 51%."
A FICCI delegation led by Mariwala was later supposed to meet the state energy minister Saurabh Patel, but the meeting was cancelled, FICCI officials said.
The state government has been in the forefront of opposing GST, saying the state will lose its autonomy in financial matters. According to state government's estimates, Gujarat will lose Rs 3,000-crore revenue annually, while the cumulative loss to all the states is estimated at Rs 31,000 crore. It had stated that the GST regime will make luxury goods cheaper but will raise the prices of items of day-to-day consumption. Saurabh Patel had earlier said information technology infrastructure necessary for implementation is also not ready in many states, which will affect timely execution of new tax regime.
Under GST, the tax burden is shared by the service sector and the manufacturing sector. At present, manufacturing goods are subjected to excise while services are subjected to service tax. However, the current tax regime is heavily dependent on the excise revenues. GST is intended to replace both the taxes, simplify the tax regime and bring down the peak rate of taxation.
Currently, different states have different rates for state excise duty, discouraging inter-state movement of the goods. GST