Guwahati, Friday, January 01, 2010
Home Classifieds Backissues Weather Contact Us
News
• City
• State
• North East
• Sports
• Business
• Obituary

Opinion
• Editorial
• Letters
• Jocoserious
• Photos

Features
• Planet
  Young
• Panorama
• Mosaic
• Horizon
• Sunday
  Reading


EDITORIAL

GST rollout
—
The long-proposed goods and service tax (GST) which is a pivotal part of economic reforms and which is hailed world-wide not only as an integrated transparent system doing away with separate indirect tax structures between the Centre and the States but also serves as effective instrument of containing evasion and avoidance of tax at all levels does not now appear to be effective from the much publicised date, April 1, 2010 since some important ground works still remain to be completed. Though the empowered committee of State Finance Ministers, headed by the West Bengal Finance Minister, Asim Dasgupta in its three-year long deliberations has come out with a four-slab GST structure, it now appears to be running into rough weather on the issue of GST rate. The four tax-slabs advocated by the empowered committee comprise zero rate for exempted items like petroleum products, alcoholic beverages and tobacco, one standard rate for majority of goods and services and another having a moderate rate while precious metals are likely to attract 1.0 per cent tax to bring uniformity in tax compliance for business community to facilitate them to maintain only a single book of accounts for the State GST and Central GST tax payment. There are, however, other quarters which think differently. Thus, the Prime Minister’s Economic Advisory Committee favours a single slab each for goods and services or one common rate for both. Its chairman, C Rangarajan is of the opinion that there is an advantage in having single uniform tax even if precious metals are included in the same category. The task force set up by 13th Finance Commission also suggests a single GST for the Centre and the States though the rates might be different as 5 per cent and 7 per cent respectively. Tax experts also believe in single rate as an ideal in the long-run though it could be different to start with.

What is important to note here is that the TFC task force in its report on GST has no doubt in mind with respect to delay in implementation of the GST scheduled for 1st April, 2010 on account of lack of adequate preparedness. Earlier this month, the Finance Minister of Bihar also said that the introduction of GST regime should be delayed by a year as the ground work for implementation is still half done. The same doubt is expressed by the executive director of a leading financial consultancy firm, though some tax experts feel that the GST could be rolled out in six months time. Madhya Pradesh and Chhattishgarh, again appear to fear from rate illusion since the integrated rate has to be high enough though the current multiple tax system with central excise, State VAT and services tax sums up to over 30 per cent. Apart from this, there is a lot of structural work still to be done like constitutional amendment to empower the States for levy of service tax and GST on imports among others. The GST draft bill may be tabled in Parliament in the coming budget session if it takes its final shape by then. However, the most important issue still remaining to be solved is the rates to be finalised on GST. Since difference of opinion has surfaced on import issues relating to the structural pattern of GST regime and since it is the most vital pillar of tax reform, all issues should be settled after thorough consideration and scrutiny of opinions. If adequate preparedness for introduction of GST regime takes some more time, it should be allowed rather than hurrying the process with flaws to keep the publicised time schedule.