news round up - Taxmann
news round up - Taxmann news round up - Taxmann
128 GOODS & SERVICES TAX - MAGAZINE [Vol. 1 system than existing one and, thus, for the sake of practical viability, multiple rate system should be introduced. The single rate system has been advocated by the PMEAC (Prime Minister’s Economic Advisory Council) also but at present ‘Single rate’ system is not a practical reality. There should be a single rate system and there should also be a National GST and lawmakers should understand that by giving the ‘worst’ to the tax paying public, they should not try to retain the best for themselves to make the things more complicated for the taxpayers. The empowered committee of State’s Finance Ministers has also suggested that multiple rate structure will be suitable because of the ground level realities; hence, while introducing the GST in country, the lawmakers, specially working for the Central Government, should reconsider their suggestion in this respect. 11-GST GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 38
2010] ANALYSIS ON PROSPECTS OF IMPLEMENTATION OF GST IN INDIA 129 AN ANALYSIS ON PROSPECTS OF IMPLEMENTATION OF GOODS AND SERVICES TAX IN INDIA VIVEK KOHLI, ASHWANI SHARMA & SUDEEP VIJAYAN* The proposed introduction of Goods and Services Tax in India is an attempt by the Government of India to rationalize the current indirect tax regime and to bring a more transparent and efficient tax system. This article provides a selective analysis on a few broad areas of the proposed GST model, in order to encourage a widespread public debate to bring into light more issues and concerns prior to finalization of the Goods and Service Tax regime for India. The author opines that the introduction of the GST regime would definitely go a long way in improving and rationalizing the quality of the indirect tax regime as it incorporates all the desirable features of an efficient tax system. Introduction 1. The proposed introduction of goods and services tax in India is an attempt by the Government of India with an objective to rationalize the current indirect tax regime in India, to bring about a more transparent and efficient tax regime in place. At present any assessee, in order to pursue its business activity, is required to pass through various levels of taxation, namely, at the National level, State level and in certain cases even at the sub-State level. The tax liability at all of the above stages is influenced by various factors, namely - multiple tax rates, cascading nature of taxes, tax administration complexities (separate authorities for most of the taxes), high compliance costs, cross-adjustment of tax credit (only allowed among certain taxes), adjustment/refund of tax, etc. Therefore, in order to ensure uniformity and boost efficiency, and rightfully to make India a competitive trading destination among the committee of nations, the Government of India has initiated its transition towards the Goods and Service Tax (GST) regime. The indirect taxation system in India has evolved over the years and has been witness to a series of structural as well as systemic changes within it - the more significant among all of them being the value-added taxation or the VAT regime. The implementation of VAT regime benefited the Government of India as well as the trade/ industry in a large way by bringing in a more visible tax structure which enhanced compliance through a degree of self-assessment, ultimately leading to reduction in pilferage of taxes. The VAT regime, though substantial in nature still suffered from various anomalies in the nature of multiple taxation, adverse cascading effect of taxes, etc., which have, *The authors are Senior Partner, Managing Associate, Associate, respectively at ZEUS Law Associates, New Delhi. GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 39
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128 GOODS & SERVICES TAX - MAGAZINE [Vol. 1<br />
system than existing one and, thus, for the sake of practical viability,<br />
multiple rate system should be introduced.<br />
The single rate system has been advocated by the PMEAC (Prime Minister’s<br />
Economic Advisory Council) also but at present ‘Single rate’ system is not<br />
a practical reality. There should be a single rate system and there should<br />
also be a National GST and lawmakers should understand that by giving<br />
the ‘worst’ to the tax paying public, they should not try to retain the best<br />
for themselves to make the things more complicated for the taxpayers.<br />
The empowered committee of State’s Finance Ministers has also suggested<br />
that multiple rate structure will be suitable because of the g<strong>round</strong><br />
level realities; hence, while introducing the GST in country, the lawmakers,<br />
specially working for the Central Government, should reconsider their<br />
suggestion in this respect.<br />
11-GST<br />
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 38
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