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According to the
Bangalore Chamber of Commerce and Industry (BCIC), carbon credits (Certified
Emission Reductions) should be treated as services and taxed as such. In its
note for submission to the Union Government, BCIC has argued that CERs are
intangible in nature and it is either exported to industrialised countries or
are tradable as securities on specified exchanges. Hence CERs should attract
only services tax, not goods tax. The taxability of the CERs should depend on
the place where they are generated and the place where they are registered, BCIC
said. It said in case the place of generation is in India and the place of
registration is outside India, they should be regarded as exported.
This is among a number of suggestions that the BCIC has madein a note after as
analysis of the implications of GST.
Among others things, BCIC favours uniform implementation of GST across States,
single Union legislations to avoid duplicity and multiplicity of legislative
framework to provide ease in applicability and administration of the levy. To
retain the basic framework of GST as envisaged by the discussion paper, the
Centre should have the sole power for any amendments, it said. States should not
be given the power to amend the basic framework of the GST legislation to avoid
the possibility of different interpretations to the legislation or the rule laid
down the by the Centre.
It recommended that the government implement the GST regime with defined sharing
arrangement between the State and the Centre, thereby protecting the interest of
the State in generating revenue.
On the point of uniform implementation, BCIC explained that unlike VAT, which
operates on originating principle and could be implemented in a staggered
manner, absence of uniform implementation of GST operating on destination-based
principle would result in cross-border transactions getting taxed in two States,
bringing significant hardships to the trade and industry. This will also
restrict free flow of cross-border transactions.
BCIC has also suggested that the legislature should adopt a common threshold for
both, goods and services. This will avoid creating a distinction between goods
and services.
Treating goods and services on par would also bring administrative ease to the
legislation, it said. Accordingly, in case goods and services are treated on
par, the trade and industry would not feel the need to take positions in favour
of that which suffers lower rate of tax.
Source:
TheHinduBusinessLine, India, dated
19/01/2010
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