“We
stand committed to implement GST from April 1, 2010. In a
federal structure, there is a distinct role for the State
Governments. We cannot bulldoze them. We have to recognise
their sensitivities and take them along. That is the process
we are on”, Mr P.V. Bhide, Revenue Secretary, told members
of the American Chamber of Commerce in India (AMCHAM).
He
was responding to concerns expressed by some members that no
roadmap had been announced for GST implementation from April
1, 2010. Moreover, the Centre and the States were yet to come
to agreement on the compensation issue for CST reduction. The
existence of CST is seen as a tax that is incompatible to the
current State-level VAT system.
Transfer
pricing
On
demands for consistent approach in transfer pricing
assessments, especially in the direct tax side, Mr Bhide
pointed out that the issues were complex and conceded that
assessment officers may be changing their interpretations.
“We
do intend to get into an interactive session in this area
(transfer pricing) with trade representatives and our experts
and see what can be done to get consistency in approach. But
don’t ever think we take steps without bearing in mind how
in line we are with international practice or out of line we
might lean to be seen as by some others”, he said.
AMCHAM
members wanted the Government to introduce advance pricing
agreements (APA) at the earliest to ensure that there are no
transfer pricing disputes. APAs are contracts between the
taxpayer and the tax authority under which both the sides
agree on transfer pricing policy for specified transactions
over a specified period of time.
A
CBDT official later indicated that the Government was not
looking at APA introduction for now. The Central Board of
Direct Taxes (CBDT) had sought industry views, including from
NASSCOM and other bodies, on what sort of institutional
mechanism prevailed in other countries for protecting such
agreements.
It
was pointed out that in the Indian context, a democracy with
change in government every five years, an institutional
mechanism was required to protect such agreements.
On
the issue of recent increase in the number of “retrospective
amendments” to overrule judicial pronouncements, Mr Bhide
defended such amendments. “I concede that some of them
appear to be harsh. But most of the retrospective amendments
are procedural. “If they were very perverse, we won’t see
increased compliance. It is also this increased compliance
that has contributed to the revenue buoyancy in recent
years”, he said.
So
