Empowered committee Instituted joint working group

It has been decided by the Empowered Committee of State Finance Ministers, in consultation with the Central Government, to constitute a joint Working Group. Work allocated to this group was —

• Study the various models of GST existing globally and any other relevant material available on the subject. It would also identify the possible alternative models for introduction of GST in India and examine their various characteristics and assess their suitability in India’s fiscal federal context. After these studies, the Working Group should present its findings before the Empowered Committee for decision on the most appropriate model for introduction of GST in India.
• Identify the Central Taxes and State Taxes which possess properties to be appropriately subsumed under GST.

Working Group was asked to submit its report to the Empowered Committee within a period of 4 months.

Cbec Chief Confident Gst Bill Will Be Passed In Monsoon Session

The Central Board of Excise and Customs (CBEC) Chairman Najib Shah is confident the Goods and Services Tax (GST) Constitutional Amendment Bill will be passed in the monsoon session of Parliament. The GST will see rapid movement towards being enacted in the next few months, he told newspersons.

“We are prepared for GST. We are putting up a robust IT system and the administrative structure is in place to take care of changes consequent to the law. We are in various stages of preparedness. We have some lead time,” he said.

“It has been a long process and we are reaching the end of a long wait. The GST involves consensus building and should address the concerns of various partners,” he told newspersons after inaugurating the office of the Indirect Tax Ombudsman.

The CBEC is engaging with state governments on the draft law and discussions are in the final stage. The whole process of consensus has to take place. The Empowered Committee is likely to meet in mid-June and after it gives its approval to the draft law, it will be in the public domain.

Once the Constitutional Amendment Bill is passed, it has to be passed by State governments and then we will have a GST law. Thereafter, responses of the public will be taken up and changes wherever required will be made. Thereafter, it will have to be passed by the respective State governments and Parliament for the draft to become a law, he said.

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Long-Awaited Gst Will Be Rolled Out Soon, Assures Pm Modi To Saudi Investors

Riyadh: Assuring Saudi and Indian business leaders that his government is working to set up a predictable long-term taxation regime, Prime Minister Narendra Modi on Sunday said the long-awaited Goods and Services Tax (GST) would soon be implemented in India.

"Don't worry...GST will happen, it will be a reality soon," Modi said, addressing the gathering at Saudi Arabia's Chamber of Commerce here.

"Retrospective tax is a matter of the past. My government will continue to work towards the establishment of a predictable long-term taxation regime," he added in a reference to recent disputes involving Indian tax authorities and multinationals like Cairn and Vodafone.


The Goods and Services Tax (GST) Bill, to implement a pan-India tax for a complete overhaul of the extant indirect tax regime, has been approved by the Lok Sabha.


It is currently stalled in the Rajya Sabha, where the ruling Bharatiya Janata Party-led National Democratic Alliance (NDA) doesn't enjoy a majority.


The government hopes the next biennial elections in the Rajya Sabha will give it enough seats in the upper house to pass the GST Bill India.

Modi, who is undertaking a three-nation tour, landed in Saudi Arabia on Saturday on the last leg.

He urged the audience to move beyond the traditional bilateral trading relationship.


"Let us move beyond merely the export-import relationship. Joint investment, technology transfers are areas that we should explore," Modi said.


Listing petroleum, renewable energy, infrastructure, defence, and agriculture, as areas ripe for expanding cooperation, the prime minister said: "India and Saudi Arabia should look at working together on building a dynamic global management sector for the cyber world."


"India and Saudi Arabia are old friends, but we are ready to take bold new steps into a golden future," he added.

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Litigation To Go Down Sharply With Gst: Finance Ministry, Experts

Service tax litigations have risen substantially in recent years and that may be because of the absence of a pan-India Goods and Services Tax (GST) regime that can potentially remove several ambiguities around indirect taxation, experts maintain.

A total of 75,314 litigations were pending with the Department of Revenue, the Supreme Court, state high courts, specific tribunals and settlement commissions in 2014-15 with revenue implications of as much as Rs.1,51,414 crore, according to India’s official auditor.

Senior officials in the finance ministry, as also stakeholders outside — notably professionals in taxation laws — feel many of the issues in indirect taxes like on double taxation, were arising in the absence of GST.

“The scope of service tax litigation will be definitely curtailed once GST is implemented. There are certain grey areas in the existing laws around service tax, that is leading to many litigations,” a senior finance ministry official told IANS.

“It’s a consensus — that GST will be the solution to preventing service tax litigations.”

The reasons are many: Some service tax items have been vehemently opposed. Courts have put on hold such levies, like on legal services provided by advocates. Industry is crying foul over such tax on transporting goods by vessels, saying it amonts to double-levy, after having paid customs duty.

Thus far, however, the bill to bring the GST regime into force is stuck in parliament.

Tax litigation firm Advaita Legal said that service tax litigations have risen much more than excise and other tax-related cases. “We are on way to seeing more such cases. GST would have taken care of all these issues,” the firm’s partner and national head Sujit Ghosh told IANS.

Associated Chambers of Commerce and Industry of India (Assocham) also asserted that service tax litigations are heading towards a rise, if not addressed timely. “The current taxation concepts are vague. Many lead to double taxation,” said J.K. Mittal, co-chair of its indirect tax panel.

“Looking at the pendency in courts, service tax litigations have taken predominance. GST won’t completely eradicate litigation. But yes, because of simplifications and removal of ambiguities, it should lead to less litigations,” PricewaterCoopers India partner Amit Bhagat told IANS.

“GST is agnostic to any kind of exemption. It is intended to simplify things,” Bhagat said. “Let’s see how it pans out.”

No Gst In This Session Of Parliament

 Still, no hope on GST 

But, on the political score card, the GST remains as a negative mark for Modi-government as the session concludes (Lok Sabha finished its business on Wednesday, Rajya Sabha is likely to follow suit today). The Modi-government has failed so far to build a consensus on the GST law, touted as the biggest economic reforms of the decade, leaving the biggest tax reform a pipedream for the economy.

In the beginning of the session, there were hopes that the Congress-party led opposition would soften its stance on GST Bill—something which is a brainchild of earlier UPA-government. But, the political climate turned when the Agusta episode dominated and put the opposition on war path. The result was GST turning casualty yet again.

There aren’t any unresolvable reasons that could block the GST Bill except lack of political consensus. There are three major points of contention between Congress and BJP on GST issue. 1) Inclusion of the GST rate (agreed around 18 percent) in the constitution 2) Doing away with the inter-state levy 3) Constituting an independent dispute resolution mechanism.

Of the three, the only major point of difference is capping GST in the Bill, but not something that has the potential to perennially block the passage of the crucial piece of reform. For instance, a solution such as empowering a joint committee involving the centre and state governments (including Congress-ruled states) to set the GST rate, isn’t difficult to agree upon. The other two demands are actually non-issues.

Overview of Gst in India

1. INTRODUCTION 

Tax base of Goods and Service tax (“GST”) would be very wide and would comprehensively extend over all goods and services up to the final consumer point. GST would have two components:

1. Central Goods and Service tax (“CGST”) – It would be levied by the Centre; and
2. State Goods and Service tax (“SGST”) – It would be levied by the States.

The basic features of law such as chargeability, definition of taxable event, taxable person, taxable transaction, basis of classification all would be uniform for both CGST and SGST, i.e. the basis of taxability would be same for both CGST as well as SGST, thereby wiping out all the disputes currently taken up by VAT/Sales tax authorities and Service tax authorities to tax a single transaction.

2. GST LEGISLATION

After carefully reading the Pranab Mukherjee, Minister of Finance in Budget speech of 2009-2010 and first discussion paper of empowered committee we deduce that there would be one act for levy of central tax i.e. CGST & one act for levy of state tax in each state i.e. SGST. Therefore, there would be multiple tax statues in India for levy of one GST. This could again bring same problems in GST tax structure that existed in VAT tax structure.

3. TAXES THAT WOULD BE FOREGONE

GST would take place of all the major indirect taxes currently applicable in India.

Central Taxes that would be subsumed under the GST:

a)      Central Excise Duty – Levied under Excise Act,1944;

b)      Additional Excise Duties – Levied under Excise Act,1944;

c)      The Excise Duty levied under the Medicinal and Toiletries Preparation Act – Levied under Medicinal and Toiletries Preparation Act,1955;

d)      Service Tax - Levied under Chapter V of Finance Act,1994;

e)      Additional Customs Duty, commonly known as Countervailing Duty - Levied under Customs Act,1962;

f)        Special Additional Duty of Customs - 4% - Levied under Customs Act,1962;

g)      Surcharge, and - Levied under on any of above taxes or any other surcharges; and

h)      Cess - Levied under on any of above taxes or any other surcharges.

Following State taxes and levies would be subsumed under GST:

a)      VAT – Levied by any state in India;

b)      Sales tax – Levied under Central Sales Tax Act, 1956;

c)      Entertainment tax (unless it is levied by the local bodies) - Levied by any state in India;

d)      Luxury tax – Levied by any state in India;

e)      Taxes on lottery, betting and gambling. – Levied by any state in India;

f)        State Cesses and Surcharges as far as they relate to supply of goods and services. - Levied under on any of above taxes or any other cesses and surcharges; and

g)      Entry tax not in lieu of Octroi – Levied by any state in India.

All the taxes listed above would be consolidated under new GST regime thereby reducing compliance costs of taxpayers and administrative costs of the government. However there are few other indirect taxes that may or may not be summed under GST regime as there is no consensus among States themselves or between Centre and States.

4. TAX RATES

Until now, there has been no official announcement regarding GST rate for India. There are disputes among State heads and Central government regarding fixation of GST rate.

5. VALUATION   

GST would be levied on value of goods and services transacted. Valuation provision would be common for both CGST as well as SGST. There is no specific information on this issue in any of the reports except that provisions would be simpler and more transparent.

6. INTER-STATE TRANSACTIONS

Centre would levy Inter-state Goods and Service tax (“IGST”), which would be CGST plus SGST on all inter-State transactions of taxable goods and services. The inter-State seller will pay IGST on value addition after adjusting available credit of IGST, CGST, and SGST on his purchases.

7. TAX CREDIT

Credit would be admissible in respect of both the components of GST i.e. CGST & SGST. CGST and SGST are to be treated separately for the purpose of tax credit. Scheme of tax credit would be as follows:

(a)    Taxes paid against CGST shall be allowed to be taken as input tax credit for the CGST and could be utilized only against the payment of CGST.

(b)   Taxes paid against SGST shall be allowed to be taken as input tax credit for the SGST and could be utilized only against the payment of SGST.

Cross utilization of input tax credit between the CGST and the SGST would not be allowed except under the IGST model.

8. CONCLUSION

The problem of the present distortionary indirect tax system can be effectively addressed by shifting the tax burden from production and trade to final consumption. The introduction of the GST will bring about a macroeconomic dividend by reducing what have been called the “negative grey area dynamic effects” of cascading taxation. The ‘flawless’ GST subsumes all indirect taxes on goods and services, which is the most elegant method of taxing consumption. Under this structure, all different stages of production and distribution can be interpreted as a mere tax pass-through, and the tax essentially ‘sticks’ on final consumption within the taxing jurisdiction

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