Industry body FICCI today said it is looking forward to introduction of the much-awaited Goods and Services Tax (GST), saying it would be a very significant step in the field of indirect tax reforms in India.
The government has circulated official amendments to the GST bill to drop 1 percent additional tax and include a definite provision in the statute for compensating states for revenue loss for 5 years as it gears up to discuss the long-pending bill in Rajya Sabha tomorrow.
The 2014 bill authorized the GST Council to decide upon the modalities for resolution of disputes.
Less burden on consumers
“From the consumer point of view, the biggest advantage would be in terms of a reduction in the overall tax burden on goods, which is currently estimated at 25 to 30 percent. The introduction of GST would make Indian products competitive in the domestic and international markets. Studies show that this would instantly spur economic growth,” FICCI said. “By amalgamating a large number of Central and State taxes into a single tax, it would mitigate cascading or double taxation in a major way and pave the way for a common national market,” it added.
Mixed bag for SMEs
However, Leader Indirect Tax BMR & Associates LLP, Rajeev Dimri said: “Irrespective of the bright side of upcoming GST, small and medium enterprises must be mindful of its accompanying challenges such as increase in compliance costs and alignment of IT systems with new processes. For the SMEs, GST throws up a mixed bag of opportunities and challenges”.
Under the modified provisions of GST Constitutional Amendment Bill circulated among the members today, GST Council will be required to establish a mechanism for adjudication of disputes, which could arise between the Centre and states or among states themselves. With these amendments, the government has partially met the demands of the Congress party.