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The
Empowered Committee has to take cognizance of the sector
specific suggestions made by NMCC, Prime Minister’s
Advisory Group and Industry for accelerating growth of
some industry segments above others by offering lower tax
rates in the national interest. "That shades of
policy interventions is a fact of life and we have to
weave such positive suggestions in the framework," he
added.
In
this regard, he said the suggestion of the PHD Chamber to
have a differential treatment for innovative healthy food
items was worth considering, adding that several such
ideas would be thrown up once GST was implemented in 2010.
Dr
Shome assured that the GST would be taxpayer-friendly,
spur investment and enhance competitiveness of the Indian
industry. However, he said that one should not indulge in
speculation that the GST rates would be radically slashed
as demanded from certain quarters of the industry. In
countries, where tax leakage is low, one could attempt a
radical slash in the rates.
He
alluded that it was not the case in India, where voluntary
compliance even by large corporations was not at the
desirable level. He mentioned that countries, which have
reduced VAT or GST rates have subsumed many taxes in that
framework and tax structure was made linear by doing away
with tax breaks.
"Even
if the present effective tax rate is kept at the revenue
neutral stage, say 28 per cent, what the assesses should
look forward to is the transparency and certainty of the
structure that could do away with the cascading effect and
helping the industry to shore up the
competitiveness," he added.
Dr
Shome mentioned that the structure suggested by the
Committee would again be discussed at a meeting to be
convened on 20th December 2007 and subsequently, the
report would be sent to Union Finance Minister.
"Thereafter, it is the political masters who would to
take the call on GST," he added.
Lacing
the important challenges in the implementation of GST, Dr
Shome underscored the need for large scale computerization
for mapping the inter-state trade, check on vanishing
assesses after taking the credit and plugging other
loopholes.
He
said that the concept of LTUs (Large Tax Units) has been
introduced only in Bangalore and it soon be introduced in
other centres like Chennai and Kolkata. He, however,
expressed the optimism that computerization to the desired
level would take place before the introduction of GST.
He
also explained the rationale of introduction of GST and
said that the States should be compensated for the large
revenue losses they would suffer by way of phasing out of
the CST. Also, he emphasized that under VAT dispensation,
no proper set off could be given for input taxes or
bringing the services under tax net.
"By
2010, we will have a structure that will overhaul all
taxes into one, of course with some exemptions," he
said.
R
Sekar, Jt Secretary (TRU-11) CBEC, who spoke at the
meeting said that the industry demand for lower GST rates
could be granted only by widening the tax base and by
doing away with the exemptions. He also underlined the
need for an effective dispute settlement mechanism to
reduce the growing litigation.
The
industry presentations at the Seminar included that from
Mr Sanjay Bhatia, President, PHD Chamber, S Madhavan,
Price Waterhouse, Coopers, Mr Satya Poddar, Ernst&
Young, India, Sanjay Khajuria, Nestle India ltd and Mr
Ashok Gupta, Hindustan Unilever ltd.
Source
: India Infoline.com - Mumbay, India, dated 29/11/2007
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