Goods and Service Tax – GST – By: – Dr. Sanjiv Agarwal – Dated:- 27-2-2013 Last Replied Date:- 30-12-1899 – On Goods and Service Tax (GST) front, there is now some news to cheer about. The Empowered Committee of State Finance Ministers which met for two days on 28-29 January, 2013 cleared the major hurdles in introduction of GST. However, we are not still sure as to whether it could come in 2014 or even later. Now the onus is on the Parliament to quickly clear the Constitutional Amendment Bill, 2011 which is now almost two years old. The Centre and the states last week crossed one major hurdle in the way of Goods & Services Tax (GST) by agreeing to a compensation formula for the Central Sales Tax (CST). A sub-committee of the Centre and states recommended 100 per cent compensation to states for a cut in CST from four per cent to two per cent for 2010-11, 75 per cent for 2011-12 and 50 per cent for 2012-13, respectively and as a result, Centre will now have pay ₹ 34,000 as CS
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required funds for various developmental works. Further, there should not be dual authority for the same tax. Also in some states, there are peculiar local taxes such as purchase tax, mandi tax, infrastructure development cess, coal cess, mining cess or royalty etc. There is a need to have a clarity and consensus on whether such taxes be subsumed in GST. Ideally yes. Economically, states have an issue as every tax is going to be subsumed in GST and states may loose on account of such taxes. How centre and states are going to address this is still not certain. GST would become a dream tax only if it is a simple and comprehensive tax leaving no room for any confusion or bottleneck leading to any inconsistency. GST : What Next – Time to wrap up loose ends – Not likely before 2014 LS elections – Constitutional Amendment Bill , 2011 – Report of Standing Committee in this Budget session, passage by winter session 2013 – GST rate – band may be introduced – Consensus
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re and states hold the key. Once consensus is reached, GST may see the light of the day in a year's time, even during any time of the year, it being a transaction based tax. While there is no doubt that GST must see the light of the day, the sooner the better, it should also address the problems in present day taxation i.e., it should seek to achieve rationalization, boost transparency, offer flexibility to Union and states and broaden the much needed tax base. If GST comes into operation, it would achieve the status of integrated and most comprehensive set off tax structure in India leading to enhanced economic activities and tax buoyancy. GST would offer a complete set off and there will be no tax cascading effect as there will be no tax on tax, an ideal proposition for all. Even the Government won't mind as tax revenues would go up substantially (VAT is a live case). It is felt that GST may seem to be a reality, if not in 2014, it may surely be in place after the next genera
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