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 :: VAT Audit :: ACCOUNTING STANDARD :: empanelment :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: TAX RATES - GOODS TAXABLE @ 4% :: TDS :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: list of goods taxed at 4% :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment :: Central Excise rule to resale the machines to a new company
 
 
« Indirect Tax »
 Indirect tax receipts to see small, brief hit’
 There is no tax on interest income of up to Rs3 lakh a year for senior citizens
 Chidambaram favours change in direct tax rates
  Further rationalization of revised simplified procedure for fixation of brand rates
 Kerala to accept demonetised banknotes for payment of state tax till Nov 24
 Centre-state gridlock over GST jurisdiction remains, could threaten tax rollout
 India to levy tax on investments from Cyprus from April 2017
 Why tax radar may detect your cash deposits after Nov 8
 Income tax notices to religious, charitable trusts
 ICAI starts course on accounting technicians
 More trouble ahead as Tata Trusts get I-T summons for tax avoidance

Indirect tax reform imperatives
February, 17th 2010

Corporate Indias hope and expectation for indirect tax reform reached a new high after the announcement of the Governments intention to introduce the Goods and Services Tax (GST) regime in India, observes Vivek Pachisia, Tax Partner, Ernst & Young.

In light of the complexity, anomalies and ever-growing litigation that currently surround indirect taxes, the proposed implementation of GST on April 1, 2010 was unanimously acknowledged by the corporate world as a radical step forward by the Government in carrying out the biggest-ever indirect tax reform in the country, he adds, during a recent pre-Budget email interaction with Business Line.

While the urgency for implementation of GST cannot be emphasised more, given the uncertainty around its introduction, current level of preparedness and the potential political challenges around such a significant country-wide tax reform, the Government may have to adapt Budget 2010 to address the need for more immediate tax reforms and rationalisation measures under the existing indirect tax regime, Pachisia adds.

Excerpts from the interview.

On top priorities.

The Central Government should firstly address its unfinished agenda on elimination of Central Sales Tax (CST), which was committed for a phase-out since the introduction of Value Added Tax (VAT) regime. Elimination of CST is a crucial step towards achieving the objective of enabling free-trade between States and paving the way for implementation of GST.

While the rate of CST stands reduced from 4 to 2 per cent pursuant to the introduction of VAT, it is imperative that the upcoming Budget addresses the need for a complete elimination of CST to eradicate its tax cascading impact.

On the need to reduce complexity.

The advent of service tax has led to manifold increase in the complexity of indirect taxes. The legislation governing the taxation of services (chapter V of the Finance Act, 1994) remains unclear and ambiguous with many loopholes.

The Indian industry, for some time, has been faced with several instances of multiple taxation, viz. the levy of VAT and service tax on intangible (such as the right to use software and IPR or intellectual property rights), works contract and so on, being the prime examples of such instances of multiple levies.

The definition of taxable service includes in relation to or in connection with, in any manner, directly or indirectly, which renders the scope of taxable services unclear and subject to differing interpretations by the various sections of the business/ Revenue authorities.

The service exporters are unable to prove that their services are exported and used outside India to qualify for exemption from service tax on export of services. Litigation in such an environment is becoming a matter of routine.

It is now long overdue that the Government divorces the taxation of services from the Finance Act, 1994 and provides a separate, more comprehensive legislation for levy of service tax with a focus on reducing litigation and a differentiated approach to make the legislation more assessee-friendly.

On refunds and rebates.

Another area of concern for urgent reforms is with regard to refund / rebate for exporter of service and Special Economic Zones (SEZ). While the Government has notified a time-bound refund mechanism and issued various circular from time-to-time advising its effective implementation, the authorities in various tax jurisdictions are following divergent practices in the absence of a streamlined and comprehensive procedure for granting refunds leading to significant delays, denial and protracted litigation.

A redefined, transparent and non-discretionary process in the upcoming Budget would go a long way in making the scheme practically effective and beneficial for the exporters.

Given the initial signs of economic revival, there have been indications of partial roll back of incentives by the government which were intended to prop up the beleaguered economy. The Finance Minister would need to tread a fine line between continuing to provide a thrust to the tax reforms to support the revival without stretching the already strained finances of the Government.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Vision

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