Goods and Services Tax (GST) – Challenges for implementation by April 2010

Goods and Service Tax – GST – By: – C.A. Bimal Jain – Dated:- 20-7-2009 Last Replied Date:- 30-12-1899 – To start with I am highlighting a quotation of Kautilya quoted by the Hon'ble Finance Minister in his Budget 2009 speech that In the interest of the prosperity of the country, a King shall be diligent in foreseeing the possibility of calamities, try to avert them before they arise, overcome those which happen, remove all obstructions to economic activity and prevent loss of revenue to the state in the context of welcome announcement made for introduction of the Goods and Services Tax (GST) with effect from 1st April, 2010 and the broad contour of the GST Model announced will be a dual GST comprising of a Central GST and a State GST. The Centre and the States will each legislate, levy and administer the Central GST and State GST, respectively and promise made by the Hon'ble Finance Minister that he will reinforce the Central Government's catalytic role to facilitate the

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ax on consumption or sale of electricity, taxes on transportation of goods and services, etc., thus avoiding multiple layers of taxations that currently existing in India. And it would be levied on manufacture and sale of goods and services at a national level through a tax credit mechanism i.e. tax is collected on value-added goods and services at each stage of sale or purchase in the supply chain and allows the set-off of GST paid on the procurement of goods and services against the GST which is payable on the supply of goods or services. However the end consumer bears this tax as he is the last person in the supply chain. The GST should consist of following principles: · Uniform rate of taxation within a specified and given jurisdiction. · Sales would be taxed under the destination based principle. · Low costs of compliance and administration. · A substantively common tax base for Central and state governments. · Substantial Co-operation in tax adm

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d procedures. · Efficacy and integration of broad based computerizations across the Nation. · Dispute settlement procedure and machinery. · Training of tax administrators and assessee. · Protecting and balancing the present and future revenues of the Centre and the States. · Safeguarding the interests of less developed States with lower revenue potential. · Treatment of exemption allowed in excise, VAT, etc. · Treatment of chargeability of Alcohol, tobacco, petroleum products which are likely to be out of the GST regime. · Various other issues like inter state transfer of goods, cross border taxation of services, place of taxation, timing of taxations, etc. Way Forward: We are required to take well thought of steps in implementation of GST with clear guidelines about the final approach of dual GST and need to take all the stakeholders into confidence such as State governments, trade & industry, service providers & service

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