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: VAT RATES :: TDS :: empanelment :: ACCOUNTING STANDARDS :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company :: VAT Audit :: due date for vat payment :: articles on VAT and GST in India :: ACCOUNTING STANDARD :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: cpt
 
 
« Service Tax »
 Pay tax once on the input, deduct it from the output
 GST Network to begin accepting fresh registrations from June 25
 Indian GST is significantly unique, but is it better?
 GST example of national integration
 6 reasons you need not fear the GST regime
 Tax return filing extension on GST may not be enough
 GST: ‘Tech readiness, tax administration key challenges’
 GST return filing rules relaxed for Jul-Aug, July 1 rollout
 GST Council gives return filing breather to India Inc for 2 months
 All eyes on 18 June as GST Council meets to iron out niggling issues
 GST Council's June18 meet to finalise e-way bill, anti-profiteering rules

Windfall gains unlikely from rollout of GST'
December, 21st 2011

Kerala's typical rural-urban continuum may just go to rule out any anticipated windfall gains from the rollout of the Goods and Services Tax (GST) regime.

An impression has been gaining ground to the effect that the State stands to benefit enormously' from the GST rollout since services contribute to 61.5 per cent of the Gross State Domestic Product (GSDP).

REVENUE IMPACT

But this may not be the case, say Mr Jose Sebastian and Ms Anitha Kumari of the Gulati Institute of Finance and Taxation (Gift) based here.

While it is too early to make any forecasts, whatever little available evidence suggests that Kerala cannot afford to be too excited about the revenue impact of GST, the authors said.

In a paper titled, Revenue and equity implications of Goods and Services Tax: A preliminary analysis,' they suggested that high expectations from a GST rollout need to be tempered with realistic assessment of the unfolding scenario.

The share of Trade, hotels and restaurants' in the State's services sector occupies a much higher ranking than is the case with other major States. Kerala is ranked fourth in terms of the size of the sub-sectors 2 and 3 under the services category.

Does it suggest that the State would be able to collect more revenue from services than Andhra Pradesh and Gujarat, ranked seventh and seventh respectively?

Herein lies the rub, the authors say. It is not the total size of these sectors but the service providers that determines a State's capacity to mobilise more revenue from service tax.

The Task Force on GST has recommended a threshold of Rs 10 lakh for individual enterprises. The higher the number of service providers above the threshold limit, higher would be the capacity of the State to collect more service tax, the authors said.

SERVICE PROVIDERS

It is exactly here that Kerala's weakness comes to the fore. The main service provides that dot the rural-urban continuum are courier agencies; travel agents; tour operators; manpower recruiting agencies; shamiana contractors; real estate agents; cable operators; beauty parlours; dry-cleaning services; internet caf; outdoor caterers; and cleaning services.

All these services are taxable as per the Central Service Tax provisions. Even if one were to assume that Kerala is allowed to tax these services, not many could be expected to measure up to the threshold limit of Rs 10 lakh.

The issue of size is not just limited to these services but to others as well. Unless the States are given the freedom to fix the threshold, Kerala may not be able to mobilise substantial revenue, the authors said.

Education and health are the two major services consumed on a wider scale in the State. In the case of health services, it ranges from small pathological labs to hi-tech hospitals.

In the education sector, it ranges from small tuition centres to self-financing colleges. The Task Force on GST has recommended that the education and health services provided by the Government and non-government organisations may be kept outside the coverage of GST.

This suggests that Kerala would have to concentrate on banking, insurance, telecommunication, information technology and services provided by professional consultants.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Achievements

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