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) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
« Service Tax »
 12 ways to avoid paying more for bank services
 I-T return filing: Income Tax offices, Ayakar Seva Kendras to remain open from March 29-31
 Top 5 money matters you must settle before March 31 From income tax returns to LTCG,
 Steep fines for missing March 31 income tax deadline
 CBEC clears some air on refunds under GST, central excise, service tax laws
 3 key tax changes for senior citizens which will come into effect from April 1, 2018
 Income tax returns (ITR) filing: Not filed returns for 2 years? Beware! Deadline nearing
 All you want to know about HRA: When you can claim and how it is calculated?
 Income Tax Saving: 6 ways to save tax without investing before March 31 tax deadline
 Unnable to file your tax return? Take help of these portals
 Do you know which 80C instruments can help you save tax and carry no future tax liability?

Include mineral royalties in GST
February, 09th 2010

The proposed switchover to the goods & services tax (GST) regime would be a path-breaking reform in Indias indirect tax system, characterised by a shift from the existing origin-based taxation to a destination-based one. GST implementation would bring about sweeping changes in the way business is carried out in India. It would mean entrepreneurs would now base their business decisions on operational efficiency rather than tax considerations. Industry wholeheartedly welcomes and looks forward to the much-awaited reform.

The existing regime is fraught with a multiplicity of tax types and rates. Tax statutes differ across states, adding to the cost of compliance. The GST regime is expected to simplify the tax structure by reducing the number of statutes and tax rates. This would result in removing the cascading effect, which would go a long way to enhance the competitiveness of goods and services.

The Centre recently released its comments on the first discussion paper, issued in November 2009 by the empowered committee of state finance ministers. The Centre favours a single tax rate for all goods and services. This is certainly welcome. Another comment that would find favour with industry is subsuming electricity duty, octroi, purchase tax and taxes levied by local bodies under GST.

However, industry would prefer bringing royalty on minerals also under GST. So far, none of the official documents have made reference to this levy. Industry appreciates the Centres suggestion to include crude petroleum and natural gas in the GST net. It is also against leaving diesel, ATF and motor spirit out of GST, as it would pose practical difficulties.

Though differences of opinion exist between the Centre and states, it is hoped that all these differences would be resolved to set the ball rolling. It is now clear that GST wont be implemented from April 2010. So, industry would prefer its implementation from April 1, 2011, rather than from mid-year.

It is expected that the GST regime would propagate seamless and unrestricted input-tax credits, unlike the existing CenVat and Vat regimes, which are characterised by restrictions.

Industry looks forward to sufficient time subsequent to the release of statutory provisions to align itself with the new regime. Switching over would require revamping the way businesses are managed, along with appropriate changes in supply-chain management, IT infrastructure, ERP and accounting systems.

The second major reform is the Direct Taxes Code, which proposes to replace the Income-Tax Act. The finance minister unveiled DTC on August 12, 2009. Various good initiatives are taken up in the DTC, such as carry forward of losses for an unlimited period, reduction in tax rates, change of base year for capital gains, etc.

However, some of the DTC provisions need review, which has already been noted by the government. The levy of MAT based on gross assets with no carry-forward option will have a severe impact on corporates. This will have a cascading effect, unintended hardship and will tantamount to a wealth tax. An investment-linked incentive may be counterproductive if the set-off of a specified businesss loss is disallowed against other income.

The DTC casts onerous responsibility on the directors of companies and proposes to hold them personally responsible for the payment of their companys tax liability. The securities transactions tax has been well understood by the market and its abolition will have a negative impact. We hope many of these issues, already submitted to the government, will be sorted out.

The direction is set and now it is a matter of speed. It will be in the interests of all stakeholders if the reforms are implemented early and, particularly, in a transparent manner. While resorting to these fiscal changes, there is need to ensure that laws are clear and unambiguous so that litigation and use of discretionary powers is reduced substantially.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Mission

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