Saturday, October 1, 2016
GST- A SIMPLE, UNIFORM AND TRANSPARENT TAX MEASURE
GST, an abbreviation of the words Goods and Services Tax, is proposed to be introduced in the Indian sub-continent, replacing the Value Added Tax Regime (VAT regime) currenenly opertive since April, 2005. The vision on GST could not go ahead since last 13 years, as there was lack of consensus amongst most of the Indian States on the apprehension that the States’ fiscal auonomy of the States would be seized by the Government India (Central Govt.) to make them cipher. Floods of dialogues yielded, a consesus barring a few States and the foundation of such new project was built up with the 122nd amendment of the Constitution of India (Constitution). The Central Govt, in the meantime, drafted out the Model GST Law on the procedural and administrative aspects, but the legal and technical aspects, pertaining to the liability, levy of tax and other allied matters, are yet to be sorted out by the GST Council, set-up by the Central Govt. with the Minister of Finance, as its Chairman and the State Finance Ministers and others, as the members. The Council is now on the heels on a war footing devoted exercise to give its birth to the GST Act on 01.04.2017. The Council has already finalized the taxable quantum to accrue tax liability in respect of the North Eastern States at Rs. 10 lakhs in place of Rs. 6 lakhs, as at present and Rs. 20 lakhs in respect of other States. The rates of tax and other ancillary matters are still under examination. The marathan trainings to the law operating machineries are being imparted, batch by batch, in full swing,
GST, in fact, is prospective measure to levy a single consolidated tax on the sales of the goods and the services. It is designed as an admixure of the Central and States laws. The central laws are (i) the Cenrtal Excise Duty Act, (ii) Additional Central Excise Duty Act (iii)Excise Duty levied under the Medicinal and Toiletries Preparation Act (iv) Service Tax Act, (v) Additional Customs Duty, commonly known as the Countervailing Duty- levied under the Customs Act, (vi) Special Additional Duty of Customs under the Customs Act, 1962,(vii) Surcharge and (viii) Cess, while the State laws are (i) The Value Added Tax Act (VAT Act), (ii) The Sales Tax Act, (iii) Amusement and Entertainment tax Act, (iv) Luxuries Tax Act, (iv) The tax on lotteries and betting. (v) Surcharge (vi) Cess and (vii) Entry Tax. The law on sales tax will include as well as Central Sales Tax Act, 1956 (Central Act).
GST law will be simple and uniform measure of tax to provide relief to the industrialists, traders and consumers from multiplicity taxes. Unlike the VAT Act, the consumers will get the benefit of deduction of tax paid on previous purchases made making way of arresting price rise to a great extent. The commodities like, crude oil, petrol oil, diesel oil with other petroleum products and liquor will be excluded in the GST net-work and the taxability of these goods will be governed by a separate road map with an independant tax-net, as was existent prior to 01.07.1993. In such a case, in order to govern the inter-State sales and stock transer of such goods, the continuance of the Central Act may be imperative..
The proposed GST regime will have three tier system, that is, three administrative laws will be there. (1) SGST Act (State Goods and Services Tax Act)-to levy tax under the State Goods and Services Tax Act), (ii), CGST Act (Central Goods and Services Tax Act)- to levy tax under the Central Goods and Services Tax Act), (iii) IGST (Integrated Goods and Services Tax Act) to levy tax under the Integrated Goods and Services Tax Act (Inter-State Sales), The IGST and CGST Act will be enacted by Parliament, while SGST Act by the State Legislatures. The taxing authoritiies under the IGST & CGST Acts will be appointed by the Board ( the Central Board of Excise and Customs, constituted under the Central Board of Revenue Act,1963)while the State Govt. will appoint the SGST officials.
The prolonged system of the goods, declared to be of special importance in the course of inter-State trade or commerce, providing the tax benefits and other facilites, will be dismantled to make equal stature in the tax scenario. The consolidated rate of tax will be uniform and within the range of 20 to 22 paise in a rupee. The consolidated rate of tax may be much lower, which is now in and around of 30 paise. The present mode of stock transfer of goods to other States with tax free movement will attract tax-net, but the formulation is to be waited. The bogus deals of prevelant stock transfer of tea, coal, bamboo, superi etc. in Assam may require to bid a good bye. The GST is a methodical and chain system of deals, but the chrnonic long continued practice of avoidance or evasion of taxes with the nexus at different levels can not be ruled out. The functioning of the Vigilance Wing and Check Post machinery will, therefore, have a dire necessity for succssful implementation of the projects.
Assam is mainly a consuming State. The recurring cost in course of movement of goods viz. transporting cost, labour cost, gratification at different angles, abnormal profit, tax elements may yield heavy price hike. The quantum of tax, collected will be lesser, as the earlier taxes paid will be admissible for credit or reimbursement. In 2015-16, the total collection of tax under the State taxation department was Rs.8614.00 in which Rs. 7641.00 includes VAT & CST, while Rs. 567.00 is Entry tax. VAT and CST amount of Rs.7641.00 includes about 33% of Crude Oil and Petroleum etc. tax, that is, Rs. 2521.00. The other tax on sales stands Rs.5120.00. While addiing Rs. 567.00 (Entry tax), Rs.19.00 (Amusement tax) and Rs. 10.00 (Luxury tax), it will come to s 5716.00. This was the collection of tax revenue in 2015-16 of the respective Acts proposed to be transferred to GST. If the collection of tax on the proposed GST measure go up, this is well and good; otherwise, the State will have to remain at the mercy of the Central Govt. for compensation, as assured. In fact, this may be a far cry.
GST will, no doubt, bring a drastic economic evolution, It is a simple, uniform and is anticipated to be transparent. However, if the economy of the poor State like Assam gets any set back, the hope and asipiration of the people of Assam will be frustrated and it may turn to a catastrophe. We are to wait and see.
(Mrinal Kanti Chakrabartty)
R.G.Barua Road, Lakhipath, Guwahati-781-024