State GST at 8%??

An update on the GST Story. The pink papers last week reported that Asim Dasgupta(West Bengal Finance Minsiter) who is the head of the empowered comittee of ministers on GST has said two important things:-

• GST is on Track for implementation from 1st April 2010. This is a very important development considering the fact that Asim Dagupta has risen above Party lines and is NOT opposing GST even though, politically the Left and UPA are at loggerheads today.
• He also went on to say that proposed rate of State GST would be 8%. This too is a significant development that atleast their is some talk in the public domain as to what the rate of  State GST will be.

Wishlist for our FM

 

The New Finance Minister Pranab Mukherjee has taken Over, and The Rupee Blog is proud to submit its Wishlist to the New FM :-

 - Don’t impose any New Taxes, we already have enough of them. The Old FM – Mr.P.Chidambaram had already burdened us with the Fringe Benefit Tax(FBT), a Tax which was unliked across Indian Business and Industry. So please don’t do the same mistake.

 - Small Scale Industry: In India, being small is rewarded by the Government and Being Big is penalised. Small Scale Industries get a Central Excise Exemption upto Rs. 1.5 Crores and this forces them to remain small. This figure is too low in the 21^st Century Indian Business Context and I know many Small Scale Industries who wish to remain small within this Rs. 1.5 Crore Limit because they do not want to grow and come into the Central Excise ambit. The Previous FM Mr.Chidambaram revised this figure only once by increasing it from 1 Crore to 1.5 Crores. But 1.5 Crores is too low and there is fit case for SSI Exemption to be raised multifold. So Minister Saheb, Please increase the SSI Exemption Limit to 12 Crores p.a against the Current 1.5 Crores.

 - Please bring about a Policy Shift towards Lower Interest Rates. In the Previous UPA Government you had pressures to keep the Bank Deposit Rates for FDs high due to political compulsions. And because the Deposit Rates were High, The lending rates had to be kept high. Due to which Indian trade and commerce could not borrow at lower interest rates. Our bank lending rates are one of the highest in South East Asia. Please break this vicious cycle of High Deposit Rates and High Lending rates and usher in an era of Lower Interest Rates.

 - Currently while Paying TDS Online using CHALLAN NO.ITNS 281 we have to file a Separate Online Challan for every category of TDS Deducted and further a separate Challan for Company as well as Non-Company Deductees. So for each category of TDS Deducted we have to fill the form and enter the banking gateway all over again. Thus if you need to deposit TDS under 10 Categories you need to do this 10 times. I request the FM to make this Online Filing slightly simpler by having the option of various TDS Deduction Categories on a single page enabling the user to pay the TDS for all categories in one go by entering the banking gateway only once.

 - GST: The UPA Government is committed to getting GST from April 10th 2010. Hence if you are really serious about the deadline, now is the time to get the Draft Laws, Tax Rates, Procedures into the Public Domain to enable people to understand it. Rather than have closed door contemplations over the drafts, please immediately make available to the public the proposed form of legislation for GST in India.

What is GST in the Indian Context?

GST as the Abbreviation suggests is a “GOODS AND SERVICES TAX”. To Understand  GST we need to understand the current taxation of Goods and Services in India.

India has a Federal Setup. i.e the Union Government(Central Government) has some taxation powers and the States have some taxation powers. The Union Government(Central Government) imposes many Direct and Indirect Taxes. Direct Taxes are Taxes like Income Tax and Indirect Taxes are Taxes like Excise Duty(also known as CENVAT. It is a Tax on Goods Manufactured in the Country) , Service Tax(Tax Imposed on Services Rendered) , Customs Duty(Tax Imposed on Imported Goods). The State Governments impose Indirect Taxes like VAT (Value Added Tax, i.e a Tax on Sale of Goods), State Excise Duty on Liquor, Luxury Tax, Entertainment Tax.

In Theory(I repeat, In Theory) , GST would be a Tax that would bring All State and Central Indirect Taxes on Sale of Goods and Services into a Single Tax. But this is easier said than done. This is only in Theory. Because India being a Federal Setup wherein States impose VAT on Sale of Goods and the Centre imposes Excise Duty on Manufacture of Goods. So in theory GST would be a Tax that combines Excise Duty, Service Tax and State VAT into a Single Tax. But due to the Compulsions of India’s Federal Setup this is not possible.

Hence the Current Proposal is to introduce 2 Different GSTs. A CGST(Central GST) and a SGST(A State GST). The CGST would bring Excise Duty and Service Tax under its fold and the SGST would bring VAT under its scope. The SGST would also empower States to collect GST on Certain Services.

This is the Proposed Form of GST Legislation as discussed in the media. It requires lot of Legislations at State and Central Levels including Constitutional Amendments to put this into Action. Moreover it requires Political Will on part of our New Vibrant UPA Government in its Second Avatar. It is interesting to see whether this would be possible in 2010 or not ?

GST: India Needs It !!!

GST: Goods and Services Tax is proposed to be introduced in India from 2010-11. There are a lot of myths, fears, misconceptions about what is GST and what will be the proposed form of GST in India. Columnists in Pink Papers are writing about it, Businessmen are discussing about it in Boardrooms, Some Business Families are even discussing it on their Coffee Tables and Dinner Tables, Chartered Accountants and Tax Consultants are searching the Net to find Info about it, Backdoor Drafters of the Law have begun drafting drafts of the legislations.

I strongly beleive that GST is a Tax that India really needs to get . On this Blog, we will keenly follow the GST Story in India and in days to come I will get info about understanding GST and its proposed form in India