Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 27-6-2009 Last Replied Date:- 30-6-2009 – India is on a threshold of the biggest tax reform of the century. While direct taxes are due for an overall rationalization and simplification, indirect tax reforms in the pipe line, if done, shall be historic. On indirect tax front, India is all set to usher into the era of a all new tax to be called 'goods and services tax' (GST) which will bring in India at par with over 140 developed nations of the world. It is going to be the biggest ever tax reform in independent India. World over, goods and services attract the same rate of tax. This is the foundation of GST. Earlier in February 2009, Finance Minster made a statement in budget speech that GST is a critical part of our economic reforms. So far as GST is concerned, this budget offers an unique opportunity to clearly spell out the blue print or load map for GST in India. Over last four budgets, Finance Minister's
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axes (CST, excise, customs, service tax) shall be subsumed into one. Also, sharing between centre and states will be there mere with a major shift in sharing pattern. In fact, GST will change the tax horizon of the country for the good. GST will also provide an opportunity to policy makers to follow principle of certainty and have clear cut defined exemptions, concessions, non taxable areas and services so as to avoid confusion and litigation. While it will be premature to comment upon GST's post implementation issues, what is more important is time frame, minimum tax slabs and tax structure. The rate of GST is not yet final and various state governments are discussing it. While the indications of a dual GST structure look bright, unified GST would be preferred by assessees as it would be cost effective and provide efficient mechanism. Dual GST is not for which India is looking for. It will only increases complexities in already too complex and multiplex taxation system in India. I
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for duties like additional custom duty or special additional duties or cess. It needs to be cleared as to what would happen to issues involving stock transfers, inter state transfer, cross border taxation of service, taxation of service etc. Issues on Cenvat credit, place of taxation, timing of taxation and person liable- all are relevant and crucial. What all taxes will be subsumed in GST should be made clear. India needs to take well thought of steps in implementation of GST and it should not be implemented hurriedly. It is still not clear about the final approach to be taken- unified GST or dual GST as also levy of GST on supply or on sale point. We also need to take all the stakeholders into confidence such as state governments, trade & industry, service providers & service recipients, consumers and professionals. Eying at April, 2010 may be a very optimistic and ambitious target but before that, we need reasonable time to test run the GST, understand the system and tax st
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