|
Disclosing
this at national conference on GST organised by the
Associated Chambers of Commerce and Industry of India (Assocham)
here, 13th Finance Commission Chairman Vijay L. Kelkar
said: “States and UTs might incur considerable revenue
losses in their bid to accept execution of GST and it
would be responsibility of the Commission to protect such
losses by providing States and UTs with compensation
package in order to advance implementation of [a]
‘flawless’ GST.”
According
to Additional Secretary (Revenue) K. Jose Cyriac, who
spoke immediately after Dr. Kelkar, the compensation
package could be for the initial few years as States and
UTs “are unwilling to compromise on their revenue losses
to execute GST”. He indicated that there could be a
single GST rate of 17 per cent which could be split into
two portions — one for the Centre and the other for the
States — at the rate of nine per cent and eight per
cent, respectively. Mr. Cyriac said the first phase of GST
could be implemented as scheduled from April next year.
However,
referring to the goals of GST, Dr. Kelkar said that the
levy was basically aimed at making the tax process
transparent and user-friendly by putting in place a single
taxation system across the country.
The
Empowered Committee of State Finance Ministers and the
Centre, he said, were discussing these issues and an
agreement was yet to be arrived at for implementation of
GST.
“The
policy of GST is still malleable and industry and trade
associations can play a valuable role in forging it by
submitting their suggestions to the Empowered Committee of
State Finance Ministers as well as the Finance
Commission,” Dr. Kelkar said.
Dr.
Kelkar also pitched for bringing construction and real
estate activities under the ambit of GST while arguing
that it would generate revenues for the government,
accelerate housing and construction activities and provide
dwelling units to the large masses at reasonable prices.
“The
construction sector is a significant contributor to the
national economy. Housing expenditure dominates personal
consumption expenditure. Further, the present piece meal
taxation of this sector encourages perverse incentives.
Raw material is charged Cenvat, the works contract is
charged VAT and stamp duty is levied on the sale. With no
provision of input tax credit in place, there is little
incentive to record such transactions either at the
construction stage or at the sale stage at their correct
value. This leads to substantial loss of tax revenues and
fuels the parallel economy,” Dr. Kelkar said.
Favouring
inclusion of this sector, he said: “I am aware that
present discussions on GST configuration do not consider
the inclusion of this sector. However, given the potential
long term benefits to the economy and to a successful GST,
I would urge that the construction and housing sectors be
included in the GST tax base, either immediately or during
a subsequent phase.”
Inclusion
of railways
Dr.
Kelkar also ventured to recommend the inclusion of the
railways under the GST fold as he felt that this would be
necessary if a level playing field is to be provided to
road and air transportation sectors which would be subject
to this tax.
Source :
Hindu - Chennai, India, dated 30/06/2009 |
