State FMs to meet industry chambers to allay GST concerns
Keen to ensure smooth implementation of GST in April 2017, the empowered group of state finance ministers will meet industry chambers on Tuesday. Within days of Parliament passing the Constitution Amendment Bill for rolling out the Goods and Services Tax (GST), several sectors had begun hectic lobbying for exemption from the new tax.Updated: Aug 30, 2016 10:51 IST
Keen to ensure smooth implementation of GST in April 2017, the empowered group of state finance ministers will meet industry chambers on Tuesday. Within days of Parliament passing the Constitution Amendment Bill for rolling out the Goods and Services Tax (GST), several sectors had begun hectic lobbying for exemption from the new tax.
“The government cannot give exemptions to sectors from the ambit of the Goods and Services Tax,” revenue secretary, Hasmukh Adhia told HT in an earlier interaction.
Industry chambers such as FICCI, CII and Assocham are meeting the state finance ministers to highlight concerns raised by several sectors. These sectors include, IT & ITES, financial services, e-commerce, renewable and energy sectors. Their concerns range from exemptions to increased compliance burden under the new indirect tax regime. “The provision of tax registration in every state under GST seems to be a recurring concern among all sectors,” said a source in the know of the matter. He did not want to be named.
Representatives of these sectors have already met the revenue secretary and other officials in the tax department to express their apprehensions about the new indirect tax.
“Several sectors such as renewable energy enjoy exemption from state levies such as value-added tax (VAT), so its best that business chambers express their concerns directly to the states,” says an official in the finance ministry who did not wish to be named. Since renewable energy, where most of the equipment is imported, enjoys exemption from customs duty, VAT and excise, the concern is regarding the cost of machinery going up after GST.
The telecom sector is also vying for similar privileges. The GST is likely to lead to a spike in charges for the consumers and so wants to stay outside the net of the new tax. “The compliance burden will increase manifold under GST. For example, service registration in every state will be cumbersome. Hopefully, they will understand the impact on the economy and telecom sector,” said Rajan Mathews, director general of Cellular Operators Association of India.
“The tourism sector has met us. They want services to foreigners to be treated as export. This is not possible,” said the official quoted above. Exports will attract a lower tax rate under GST.
For e-commerce players of India, the concern is the compliance under GST. Under GST, e-commerce operators would be responsible for collecting tax at source from sellers at a rate to be notified. “This would increase the compliance burden and they want the onus of paying taxes to be shifted to the sellers,” said an official in the tax department. But he clarifies that this exemption cannot be given to the ecomm sector, as the burden of paying tax will be on the aggregator.
Dashing hopes of most sectors, Adhia said: “High exemptions will mean that the tax rate will become high, so it is not possible”.