Win Win Win – Situation - CBEC Member Dutt Mazumder wins Hyderabad
MR S DUTT MUJUMDER, Member, Central Board of Excise and Customs, while explaining the happenings up to the stage of release of discussion paper on GST said the Finance Minister had explained that GST regime will create a win-win-win situation, that it is beneficial to all the three stake holders- the centre, state, and the trade. He was addressing a conference of trade and industry organized by Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) on Friday at Hyderabad. In an excellent presentation before a large elite audience, he virtually floored the tax experts with his lucid explanation of the concept of and approach to GST.
He said that the model of CGST and SGST is necessitated as Indian Constitution provides for fiscal federalism which gives financial powers to state governments to raise resources through taxation. Some of the issues like inclusion of certain taxes like purchase tax in GST, rate structure, and threshold exemption limit, inter-state movement of services like Telecom services, are yet to be sorted out, but will be sorted out soon. He said that common classification and valuation of goods is the hall mark of GST regime and efforts are on the way to achieve this goal. He said that first draft of necessary Constitutional amendments required for GST implementation has already been prepared and sent to Law Ministry and said that his team is fully geared up for meeting the deadline of 01.04.2010 and expressed optimism that the new regime will be in place by that date.
Even the Central Excise department is required to change its mindset because the concept of ‘manufacture' will go away in GST regime. While citing an example, he said, that in the GST regime there will be single registration for a GST assessee for all his industrial units/trade units located at various places within a state and the assessee will have an option to pay GST from the Head Office. He said that this will make some of the Commissionerates, Divisions, Ranges redundant and the department may be required to go for massive reorganization of its offices and staff. The Central Excise department with its vast experience in dealing with credit mechanism and taxation of services would have to work in tandem with state authorities having experience in taxation on sale. GST regime proposes to introduce trade friendly measures like less cumbersome registration procedure, reducing periodicity of returns, minimum audit.
Mr. Vivek Johri, Joint Secretary, Tax Research Unit, said that the biggest problem faced with the GST formulation is dealing with taxation of inter-state movement of goods. He said that the Integrated GST model is novel and unique and would take care of taxation of inter-state movement of goods without loss of revenue to the state where the goods or services are ultimately consumed. While explaining the model briefly he said the Centre as an honest broker will administer, collect and distribute the taxes to the respective states. He said the GST regime envisages settlement of pay in /pay outs every month with each state basing on the returns filed by the assesses of the state. While replying to one of the queries, he said that new regime proposes to tax inter-state stock transfer of goods as deemed sale and GST is required to be paid on such transfers on notional value and at every stage both CGST and SGST is required to be paid.
GST discussion paper is only an expression of intent of State Governments, Centre is yet to examine it : P V Bhide
The usually flamboyant all powerful Revenue Secretary Mr. PV Bhide chose to speak only after the presentation by Mr. Mazumder and Mr. Johri and there was hardly anything left for him to speak. On Thursday, when FAPCCI held a meeting to discuss the Direct Taxes Code, it was wholly a Bhide show, but on Friday during the GST meet, he looked rather bored.
“The GST regime will make the trade and industry more competitive in the international market”, said Mr. Bhide. He said that the GST regime will reduce the net tax incidence by 33% which will make trade and industry more competitive internationally. He also said that efforts will be made by discussing with stake holders to keep the exemption list to minimum applicable across all states which will keep the GST credit chain intact and at the same time widen the tax base, if one wants to be in the credit chain better not to avail exemption he added . There will be single identification number (Registration number) basing on PAN number in the GST regime which will facilitate exchange of data easily. He advised the trade and industry to take up common issues with their respective State Governments so that a uniform GST law can be codified for seamless administration. He also added that thinking is going on to create a supervisory body consisting of State Finance Ministers and representatives from centre to take care of any deviation by any State from the GST code.
Trade Views:
Speaking on behalf the Trade, Mr. Thirumalai, Past President of FAPCCI impressed upon the GST framers that the new regime should not increase the transaction costs through increased number of returns and paper work. He said that one Return / one Authority would greatly facilitate the assessees. He also expressed apprehension that in the name of fiscal federalism if the GST regime allows the states to impose certain taxes, it will derail the very objective of GST.
Today we also bring his presentation in our TIOL RUN UP TO GST.
What is this win win win?
After the meeting, a FAPCCI Member asked me, “what is this win win win situation?, we pay the taxes and the Central Government and the State Government fight over who is to get how much and where is the ‘win' for us?”