In what may set the ball rolling for implementation of a Goods and Services Tax (GST), a Parliamentary panel on Wednesday gave approval to the legislation while suggesting some amendments relating to tax structure and dispute resolution.
The standing committee on finance, which is headed by senior BJP leader Yashwant Sinha, said the GST Bill should not include specific aspects relating to tax rates, exemptions, exclusions, thresholds, administrative arrangements, etc.
"What should be included in the laws and rules should not form part of the Constitution of India. The present bill relating to GST, in the Committee's view, has not been well drafted from this perspective and therefore require amendments as suggested...,” said the panel.
The panel has also mooted a monitoring cell to oversee the impact on key aspects like growth, inflation, hoarding, compliance cost for tax payers and price of end products. It also suggested amendments in the Bill for a permanent compensation mechanism to address revenue concerns of states.
The panel has also suggested omission of GST dispute settlement authority, proposing instead that the GST Council be empowered to deal with differences among stake holders.
The Goods and services tax (GST), which is hanging fire for quite some time now, will subsume indirect taxes like excise, services tax and sales tax. Both the Centre and states will have powers to tax supply of goods and services right from primary stage to final consumption.
It will alter the indirect tax structure by replacing levies with a single tax each for goods and services eliminating a multiplicity of existing indirect taxes and will simplify the tax structure, broaden the tax base, and create a common market across states and federally administered districts.
At the same time, GST will lower the average tax burden for goods and services companies that now pay "cascading" taxes on top of taxes through the production process. Reducing production costs will make exporters more competitive.
Noting that various matters relating to GST are in flux, the Committee said that it "decided to pronounce their views on the Bill and fulfil their mandate so that they are not blamed for stalling the Bill".