Kerala Finance Minister K. M. Mani said here on Sunday that the Empowered Committee on Goods and Services Tax (GST) would soon decide on whether to go in for one or two rates of GST in the country.
Mr. Mani, who is a member of the Committee comprising of State finance ministers, said in an article released for publication after the Committee’s visit to European Countries to study the tax system that the decision would be taken after reviewing various study reports and the tax rates in foreign countries.
There were divergent views on whether India should have one or two rates of tax, and rates proposed ranged from 11 to 20 per cent. A higher rate for general goods and a lower rate for essential commodities were under discussion. The Union Finance Ministry had taken the stand that if a single rate was to be adopted, it should be 16 per cent.
Mr. Mani said that the rising importance of the service sector in the gross domestic product pointed to the need for merger of the tax on goods and services in the form of GST. This would be of special benefit to Kerala as the service sector was contributing more (60 per cent) to its economy.
He said that the committee had discussions with the Organisation for Economic Cooperation and Development (OECD) on the outcome of introduction of GST in European countries. OECD experts opined that a change over to GST would help to speed up economic growth. It had been estimated that introduction of GST in Canada had helped to increase the rate of growth by 1.4 per cent.
The GST system had contributed considerably to economic growth, increase in production, price control and consumer protection in the European Union. The Sales Tax system led to tax on tax. The GST system eliminated this by providing for input tax credit. The tax was only on value added and this reduced tax burden. Prices would come down as tax on tax is avoided.
The Minister said that one of the major gains on introduction of GST in India would be in inter-State trade. It would render the trade transparent and easy since a unified rate would apply to all goods and services. It would also help to streamline transport of goods across the country, as tax system based on destination principle. The tax structure would become simple and easy to implement as a single tax replaces excise duties, service tax, countervailing duty, special additional customs duty and cess at the Central level and value added tax, luxury tax, tax on lotteries, entertainment tax, entry tax, cess and surcharge at the State level.
Sunday, April 8, 2012
Kerala ready to introduce GST: Isaac
Kerala ready to introduce GST: Isaac
Kerala is fully equipped to change over to the goods and services tax (GST) regime from the beginning of 2010-11, if the Union government can work out a consensus on it among the States, Finance Minister T.M. Thomas Isaac has said.
Speaking at a workshop here on the GST here on Tuesday, Dr. Isaac said that e-filing and e-payment facilities introduced earlier this year would help Kerala ensure a smooth transition from the existing system to the new one. All that remained to be done in the State was put the officials through a round of training.
Being a State receiving bulk of the items for its consumption from other States, he said, Kerala will benefit to a certain extent by the GST system since it envisages transferring a portion of the tax collected at the manufacturing end to the State that consumes the goods. On the flipside, the State will lose out on the purchase tax revenue from items such as rubber produced here and consumed by other States.
Dr. Isaac said that it was, however, unlikely that the GST regime could be introduced by the beginning of the coming financial year, since there were differences of opinion among the States about its broad format.
The system basically aimed at doing away with several kinds of levies on goods and services, charged by the Union government and the State governments, and bringing them all together under a single new levy that would be shared by the governments.
Dr. Isaac said that Kerala was of the view that the Union government should hand over excise and service taxes entirely to the States. The revenue from these sources now accounted for only 20 per cent of the Centre’s tax receipts.
The Finance Commission could work out a formula to adjust the States’ share of the Central taxes accordingly, he said.
Dr. Isaac said that the collections by way of corporate, customs and personal income tax would leave the Centre with sufficient resources to carry on the Centrally-sponsored development programmes.
Kerala is fully equipped to change over to the goods and services tax (GST) regime from the beginning of 2010-11, if the Union government can work out a consensus on it among the States, Finance Minister T.M. Thomas Isaac has said.
Speaking at a workshop here on the GST here on Tuesday, Dr. Isaac said that e-filing and e-payment facilities introduced earlier this year would help Kerala ensure a smooth transition from the existing system to the new one. All that remained to be done in the State was put the officials through a round of training.
Being a State receiving bulk of the items for its consumption from other States, he said, Kerala will benefit to a certain extent by the GST system since it envisages transferring a portion of the tax collected at the manufacturing end to the State that consumes the goods. On the flipside, the State will lose out on the purchase tax revenue from items such as rubber produced here and consumed by other States.
Dr. Isaac said that it was, however, unlikely that the GST regime could be introduced by the beginning of the coming financial year, since there were differences of opinion among the States about its broad format.
The system basically aimed at doing away with several kinds of levies on goods and services, charged by the Union government and the State governments, and bringing them all together under a single new levy that would be shared by the governments.
Dr. Isaac said that Kerala was of the view that the Union government should hand over excise and service taxes entirely to the States. The revenue from these sources now accounted for only 20 per cent of the Centre’s tax receipts.
The Finance Commission could work out a formula to adjust the States’ share of the Central taxes accordingly, he said.
Dr. Isaac said that the collections by way of corporate, customs and personal income tax would leave the Centre with sufficient resources to carry on the Centrally-sponsored development programmes.
GST
Kerala would be the first state to be information technology prepared to implement the proposed Goods and Services Tax (GST), a survey conducted by KPMG said.
The Centre plans to introduce GST and DTC (Direct Taxes Code) from April 1, 2011. While DTC would replace the Income Tax Act, GST would replace most indirect taxes at the central and state levels like service tax, excise duty, VAT, cesses, surcharges and local levies.
The Centre plans to introduce GST and DTC (Direct Taxes Code) from April 1, 2011. While DTC would replace the Income Tax Act, GST would replace most indirect taxes at the central and state levels like service tax, excise duty, VAT, cesses, surcharges and local levies.
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