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.