Industry asks Centre to simplify sales tax norms

There is a need to announce a road map for the Goods and Services Tax (GST) that would eliminate taxes leading to cascading and distortionary effects, industry chamber CII said. The chamber has sent its recommendations to the finance ministry on constituting the GST model, adding that it must be simple to administer with efficient tax collection and credit disbursement mechanisms.

CII has recommended that India should have only two indirect taxes — GST (Central & state GST) and property tax. The Central GST should include central excise, service tax and education cess while state GST could include a combination of all taxes currently levied by the state and octroi by municipalities, it said.

On levying the Central and state GST, CII said both must be levied on the common base price from manufacturing to retail stage on goods and services. Tax on property sale must be levied on the value addition under the state GST and not on the total amount as applicable currently, it added.

The chamber has suggested that municipalities should get financial support from states to meet their expenses and should be allowed to impose only property tax. The responsibility of tax collection should be divided and any tax-paying unit should pay Central and state GST to only one authority, CII said in a statement.

The Centre could collect GST from manufacturers and service providers while states could collect it from others, including traders, the chamber recommended. The input tax credit to be available for the Central GST as well as state GST should be paid irrespective of the collecting agency and a nationwide clearing house mechanism must be created to facilitate transfer of Central and state GST and allow credit for tax paid, CII said.

The chamber has made the case for allowing states to collect dual GST on certain services consumed directly like beauty treatment and levying dual GST on imports with credit for tax paid.

Other recommendations include no tax element in prices of goods exported, the tax collecting authority to be responsible for refunds, and refunds to be given based on the periodical return within stipulated time frame not exceeding the periodicity of return. The consumer, who is the actual taxpayer, should be able to find the element of total tax paid, CII said.