New Delhi, January 26: The department of revenue (Government of India) has released its comments on the First discussion paper issued by the empowered committee of the state Finance Ministers (EC) which shows that though on most of the matters both centre and states are agree but there are certain and clear differences between the states and centre on the basics and important aspects of the Goods and service tax.
The empowered committee under the chairmanship of Dr. Asim Das Gupta has released its first discussion paper on Goods and service tax on 10th Nov. 2010 and at that time it appeared that centre and states are agree on major and basics of the Dual Goods and service tax since Finance Minister Mr. Pranab Mukharjee was also present at the time of release of discussion paper and even after lapse of first 15 days no negative comments were received from the centre but thereafter news reports coming out that centre has its own plans with respect to rate of tax, the threshold limit under CGST , purchase tax and taxing the alcohol products.
The report of task force of 13th Finance commission has also made it clear that there are difference between the states and centre and further the report of task force is considered to a released document to show the intention of the centre that sole authority to decide the basics is not the EC and thus undermining the importance of the EC.
The comments of department of revenue also confirm the fact that though again and again news reports are coming about the prospective date of introduction of Goods and service tax but still there are basics on which states and centre have the opinion difference.
These comments shows that though there is an agreement on Dual format of GST, common base of taxation , restriction on cross utilization ITC between SGST and CGST , uniform procedure for collection of tax, dual administration of the GST, tax on imports, zero rating of exports and basics of new and innovative IGST model .
The basic difference are dual rate of tax- state are of the opinion that there should be dual rate of taxation- a lower rate for essentials and standard rate for others but centre is advocating for the single rate.
The states have suggested a threshold limit of Rs. 1.50 crore for CGST but centre has the plan to make it equivalent to the SGST which is around Rs.10 Lakhs only. The states has suggested 0.50% composition fees for all the small dealers having turnover up to Rs. 50 Lakhs but it appears that centre is of the opinion that a further composition fees of 0.50% to be imposed in lieu of CGST. The comments of DOR also suggests that besides taxes suggested by the discussion paper , electricity duty , Octroi , purchase tax and taxes imposed by local authorities should also be subsumed under GST.
Note: – The author of the Article is a chartered accountant and a GST Expert who has written more than 500 Articles on VAT, Service Tax and Income Tax and at present regularly published in Taxmann , New Delhi Publications.
–Agencies