GST unlikely
to become a reality for another 2 years
Goods and Service Tax (GST) is unlikely to become a
reality until April 1, 2013. The Union government, which
initially wanted to usher in GST from April 1 this year,
has deferred the same to April 1, 2011. However, given
the present circumstances, GST may become a reality only
two more years later, noted Sanjay M Dhariwal, director,
DNS Consulting Pvt Ltd and partner, Dhariwal and
Sreenivas, Bangalore.
Delivering a talk on 'An
overview of goods and service tax' at the Kanara Chamber of Commerce and
Industry here on Saturday, Sanjay said the GST is tall on promises. "It is not
going to be litigation free, but will certainly bring down litigations," he said
adding that various current taxation laws will have to be subsumed in to the GST
before it is implemented. "It will have it flaws and the fine print will come to
bug people," he said.
Noting that the empowered committee of finance ministers of state has suggested
a dual GST model that will have two components, he said the centre and the
states would impose taxes under the GST regime concurrently, but individually.
Base of GST will be common for both State GST and Central GST extending over all
goods and services up to the point of the final consumer. The taxation of
services will be based on negative list.
Observing that GST is the ideal choice for industries, one that would lead to
growth of India, he said the overall taxation rates would dip in the long run.
The fears of dip in tax collection due to introduction of GST is unfounded, he
said adding that the empowered committee is highly confident that the collection
of taxes will be far higher that what it is now. This is mainly because ambit of
taxation will be widespread than before, he said.
The Centre is willing to set aside Rs 50,000 crore to compensate the states in
eventuality of any dip in their share of revenues in 2013, Rs 40,000 crore in
2014, and Rs 30,000 crore in 2013. This they have done out of confidence that
revenues of both the states and the centres will not be impacted. The centre may
come out with greater clarity on how the services are to be taxed, he noted.
Srinivas S Kamath, KCCI president was present.
