The empowered committee of state finance ministers for goods and services tax (GST), headed by West Bengal finance minister Amit Mitra, will meet industry bodies on Tuesday to deliberate on the concerns regarding the proposed unified indirect tax regime, expected to be rolled out during the next financial year.
The industry bodies and chambers — including the Confederation of Indian Industry (CII), Assocham, Ficci, Nasscom and the Confederation of All India Traders (CAIT) — are expected to raise a slew of concerns, including clarity in definition of supply rules, registration of entities and intra-company services.
The industry is also likely to pitch for a lower GST rate of about 18 per cent and simultaneous implementation by all states.
The government is targeting a GST roll-out from April 1, 2017. Since the passage of the Constitution amendment Bill for GST by both the Rajya Sabha and Lok Sabha earlier this month, eight states have ratified it in their respective Assemblies. The central GST and integrated GST Bills will need to be passed in the winter session of Parliament for the planned April 1 roll-out.
CII is likely to recommend that in case of freebies given along with main product or combo packs, no separate GST should be levied on the free item and its price should be deemed to be included in the price of the main product. There appears to be an ambiguity on the matter, with the GST draft laws indicating that the tax will be imposed on the free items as well. It might also ask for early clarity to stakeholders on treatment of area-based exemptions or refunds under excise, for instance hilly states like Uttarakhand and Himachal Pradesh and the Northeastern states. The government has received 40,000 representations on the GST draft laws that it made public on June 14. Assocham will pitch for inclusion of electricity in the GST right from the beginning to avoid distortions. “…the central government’s view before the Rajya Sabha Select Committee on GST indicates that inclusion of electricity is not envisaged in GST. Non-inclusion of electricity will lead to significant economic distortions,” the industry chamber said.
It is also likely to seek a clear definition of location of supplier/recipient of goods and location of supplier/recipient of service, in the context of practical difficulties that may arise. Besides, intra-state and inter-state have not been defied in the CGST draft law. There are no provisions to deal with supplies made to a special economic zone. CAIT is likely to seek seamless input tax credit system, a uniform tax rate and clarity on definition of supply rules.
“There are many points that we have concerns on. We want the definition of supply to be very clear so that nothing is left discretionary,” said Praveen Khandelwal, national secretary- general of CAIT.
He added that the trading community would benefit from the early implementation of GST as it will allow the benefit of input tax credit, which it does not get in case of service tax and excise duty. “We want it to be implemented as early as possible. However, we expect all our concerns to be addressed in a proper way.”