The Finance Ministry on Wednesday maintained that the
net burden of indirect taxes on the people would come
down by 25-30 per cent when the proposed Goods and
Services Tax (GST) is introduced from April 1, 2010, as
originally scheduled, or “as soon as possible”.
Speaking at a conference on ‘GST -- Roadmap to
2010’ organised by the Associated Chambers of Commerce
and Industry of India (Assocham) here, Revenue Secretary
P. V. Bhide said: “Distortions in the indirect tax
system will be fully removed and addressed after the GST
is put in place... [the] burden on tax payers will be
reduced by at least between 25-30 per cent and the new
system will ensure complete transparency to ensure
smooth tax compliance.”
Mr. Bhide disclosed that real estate would also be
brought under the GST net and discussions in this regard
between the Centre and the States were almost
conclusive. The draft legislation on GST, he said, had
been referred to legal experts and would be finalised
shortly “to enable the government to achieve target of
implementation of Goods and Services Tax as has been
promised by April, 1, 2010, or as soon as possible.”
To a query by Assocham President Swati Piramal, Mr.
Bhide admitted that there were divergent views expressed
by the Empowered Committee of State Finance Ministers
and the Thirteenth Finance Commission (TFC) on certain
issues relating to GST, but noted that these were on the
verge of finding a solution.
As per the implementation programme, the government has
plans to introduce the GST regime from the new fiscal to
replace excise duty and service tax at the Central level
and the VAT (value added tax) at the State level, apart
from others levies such as cess, surcharges and local
taxes as currently applicable on good and services.
However, a task force of the TFC has suggested a delay
in its implementation by six months to October 1, 2010.
Explaining the benefits of the new tax regime when
rolled out, the Revenue Secretary said: “There are some
invisible advantages of the GST that also need to be
factored in. Presently, the domestic industry is subject
to a variety of indirect taxes on its output. As the
rates of tax and their nature vary from State to State,
it becomes impossible to apply these taxes fully to
competing products that enter the domestic stream
through imports in a WTO compatible manner. Special
additional duty of four per cent currently applicable to
import of goods does not fully counterbalance all
domestic taxes such as CST, VAT and others as rates of
tax on a given product vary from State to State.”
