Provide waiver on unintentional mistakes in compliance of GST during transition
There is also concern about the multiple audits and investigations provided in the draft GST Bill spanning over a long period of 3 to 5 years whereas the entire GST process will be fully computerised and each transaction is required to be recorded in the monthly return. These excessive administrative provisions need to critically examine to avoid inspector raj which may be counter-productive to the objective of GST to provide ease of doing business.
There are issues regarding the construction industry as well. Input Tax Credit is not available for inputs/ input services utilised in the construction of immovable property. Tax paid on inputs/ input services would become a cost for the builders/ developers. Services like fees, user charge or rent or any other manner from use of such buildings or infrastructure would be subject to GST. This will make huge investment required in infrastructure development unattractive. The Draft Legislation does not provide for the abatement of the value of land for levy of GST. “Need clarity on the taxability of the development rights under the Draft GST Legislation”.
As regards banking and financial issues, there is no clarity on exclusion of interest from levy of GST. Interest is excluded from the taxable value the world over including in India under the service tax. It is suggested that draft GST law should make it clear. The recipient of service is not clearly defined for taxation of banking and insurance services. This may lead to tax dispute on jurisdiction for SGST purpose. Likewise, the valuation of services like currency conversion which forms part of pricing is not provided in draft GST Bill or Valuation Rules.
The chamber would seek clarifications on all these issues from the Empowered Committee (EC) of State Finance Ministers.