CBEC is GST Ready - Member

By Vijay Kumar

YOU don't believe that GST can come from April 2016, but CBEC Member assumes it will.

Addressing a seminar on ‘GST@2016: Issues & Solutions,' organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) yesterday at New Delhi, CBEC Member VS Krishnan said that the Central Board of Excise and Customs (CBEC) is proceeding on GST preparedness on the assumption that the new regime will be implemented from April 1, 2016, according to a Press Release issued by ASSOCHAM.

The Member says:

• Unlike the direct taxes, indirect tax is a transaction tax. It is not based on a yearly assessment... Theoretically, there is no issue on introducing GST in the middle of the financial year. Unlike Income Tax, which has an assessment year, there is no such year for transaction tax.

• Petroleum industry will face all the existing levies by Centre, states till it's brought under Good Service and Tax (GST). Industry will not get credit on additional excise duties paid on petroleum products.

• Industry will have to take a view if they want to continue only due to tax exemptions. All exemptions will be phased out over a period of time under GST. Sectoral exemptions will be phased out under GST except infrastructure exemptions like power.

• A revenue bonanza awaits India with GST. We have grossly underestimated revenue gains from GST rollout.

• GST model laws likely to be finalized by end of the month; will be placed for public consultation. The State Finance Minister (FM) panel will consider the model GST laws as well.

• Special area exemptions will go and will be replaced by some other system. There's a grand fathering arrangement for exemptions; there's a sunset date. Bringing services under GST will be a major challenge; for the states it will be a leap in the dark .

• GST will create a level playing field between imports and domestic manufacturing. It's expected that GST rate will be below 26.5%. Currently effective indirect tax rate including VAT is 26.5% and it will be very difficult to cheat under GST; compliance will go up under GST. The Inventory cost of industry will come down under GST.

Mr. Krishnan is due to retire in November 2015.

Also See : TIOL TUBE Videos on GST