Can GST protect India post Brexit turmoil
Experts want India to offset any
adverse impact of Brexit by passing the GST in the upcoming monsoon session
by Shrutee K/DNS
Mumbai, June 24, 2016: Even as global markets plunged
following Britain’s exit from the European Union, the sentiment in the
financial capital of India was – How will it impact India? At a workshop in the
city, experts felt that passing the GST in the Rajya Sabha will be the best way
to tackle post Brexit uncertainty in India. “The GST network is ready; the IT
infrastructure to support the regime is in place. There is a likelihood that
the GST Bill can also be passed by at least 50% of the state governments.
However, the real test would be the passage of the bill in the Rajya Sabha,” remarked
Mr Abhishek A Rastogi, Director, Tax
& Regulatory Services, PricewaterhouseCoopers (PwC) at the Make in
India Fourth in Series Workshop on ‘Implications of GST – Industry Perspective’
organised jointly by World Trade Centre Mumbai and All India Association of
Industries, supported by IDFC.
“I expect the Congress to oppose
GST, other parties will support. But will the Rajya Sabha proceedings will go
on time, will there be disruptions? I cannot predict that,” Rastogi said
raising a concern. Speaking about the pros and cons
of the GST regime, he stated that the government has included various
provisions to make the GST regime tax-payer friendly, reduce litigation,
transfer of unutilised input tax credits and so on. In fact, the Integrated
Goods and Services Tax (IGST) is the most innovative and appropriate model for
a federal country like India. However, there are some areas of concerns which
include valuation of barter transactions, definition of some transactions, he
pointed out.
Speaking on this occasion, Mr Firoze B. Andhyarujina, Senior
Advocate, Supreme Court, that GST is a time supply tax in contrast to
excise. He said that GST would promote India’s economic growth and offset any
adverse impact on the economy from Brexit. “This workshop on GST is being held
on an historic day when British citizens voted to leave European Union. The
exit of Britain from European Union would have a far-reaching impact on global
economy, especially on international trade. The Indian government must use this
development to introduce GST and support economic growth.”
Mr Andhyarujina raised hope that the GST regime would reduce the number
of litigation between the industry and tax authorities. He informed that while the
government’s tax collection doubled in the last five years, the tax disputes
has risen over 600% during the same period. The government has to pay Rs 1
lakh crore in FY16, the senior advocated pointed out.
He stated that there are some
onerous provisions in the GST bill. For example, it is the onus of the buyer to
conform whether the seller has paid the tax on inputs. Also, the benefits given
to employees are not eligible for claiming input tax credit. However, there are
more contentious issues that need to be ironed out. These include issue of dual
control by central and state governments, the determination of revenue neutral
rate and so on. Talking about GST on E-commerce
sector, Andhyarujina pointed out that it would improve the tax base. “Non
filing of returns within 6 months would mean losing dual registration – State
and Central,” he added.
Earlier in her welcome remarks Ms Rupa Naik, Director- Projects, World
Trade Centre Mumbai, said, “GST is a path-breaking reform in India’s indirect
taxation system and I expect the introduction of this regime to boost
manufacturing sector of the country.” During the event, India’s leading
financial institution IDFC, which started banking operation in October 2015,
made a presentation on how it would simplify banking services by adopting
cutting edge technologies.
Rastogi concluded the workshop by
recalling that the GST Bill has been tweaked enough to favour business. “The
banking industry has been gearing up, holding discussions. However, the
training of the government officers is a concern. They will have to unlearn
from the past and a change in temperament is essential,” he added.
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