GST not to affect trade, investment: finmin  

The finance ministry has assured other government departments that the proposed goods and services tax (GST) would not have an adverse impact on trade and investments in the country. The issue was taken up at an internal meeting held by Cabinet secretary KM Chandrasekhar on Tuesday with top officials from all central ministries on GST and the Direct Taxes Code (DTC).

Concerns were also raised over provisions in the draft Code including the proposed shift in minimum alternate tax (MAT) from gross profits to gross assets and the move from profit-linked incentives to investment-linked incentives, as many ministries are of the view that these would hurt the profitability and the performance of companies. Finance minister Pranab Mukherjee has already promised to review the proposal of MAT in the draft Code.

Meanwhile, revenue secretary PV Bhide and officials from the Central Board of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) held presentations on GST and the Direct Taxes Code and also fielded queries from those present.

GST and the Direct Taxes Code will completely overhaul the country’s tax regime over the next two years. GST would subsume excise duty, service tax, value-added tax and other state-level duties, and is slated to be introduced from April 1, 2010. The finance ministry is planning to implement the Direct Taxes Code from 2011-12. The Code aims to replace the current Income Tax Act, 1961.

To lay the groundwork for these changes in the taxation system, finance minister Pranab Mukherjee also met representatives from trade and industry last week to discuss their concerns on the draft Code and is expected to hold more such meetings in coming days. 

Source :  Financial Express, India, dated 14/10/2009