New Delhi - The government panel set up to suggest a uniform rate of indirect tax under the GST regime will submit its report by this month-end and the roll-out of the reform measure is possible any time next fiscal, a senior CBEC official said on Wednesday.
CBEC has also suggested to Finance Minister Arun Jaitley to set up consultative bodies in each state in the form of GST Secretariat for better coordination between the Centre and states for the roll-out.On the uniform tax rate, CBEC member GST V S Krishnan said: "A very high rate could dilute the advantages of GST. There is a committee which has been set up under the Chief Economic Advisor, which is likely to give its report by the end of this month."
Internationally, the GST rate ranges between 16-20 per cent. However, there are exceptions like Japan, Australia and Germany where the rates are 8 per cent, 10 per cent and 23 per cent respectively.
The government has set April 1, 2016 as the roll out date for the indirect tax reform Goods and Services Tax (GST), which will subsume excise and service tax and other local levies. GST reform has been hanging fire since 2006-07.
The Constitution Amendment Bill for roll out of GST has been passed in the Lok Sabha under the new government, but is yet to be approved by Rajya Sabha where the ruling BJP does not enjoy majority.
"Unlike the direct taxes, indirect tax is a transaction tax. It is not based on a yearly assessment... Theoretically, there is no issue on introducing GST in the middle of the financial year. Unlike Income Tax which has an Assessment Year, there is no such year for transaction tax," Krishnan said at an Assocham event in New Delhi.
He added however that a final call will be taken by the Finance Minister and the Central Board of Excise and Customs (CBEC) is proceeding on GST preparedness on the assumption that the new regime will be implemented from April 1, 2016.
On the consultative committees suggested by the CBEC, he said: "This will bring together senior officers of CBEC which will be implementing the CGST and senior officers of states who will be implementing the SGST. They have to be brought together in consultative arrangements. These consultative bodies will be very useful both in pre-implementation and post-implementation stage of GST."
To set up such bodies the Cabinet Secretary will have to write to the states, Krishnan said, adding these bodies can force the bonds of fiscal federalism in the future.
He said the GST law would be drafted by the end of this month and it would then have to be cleared by the Empowered Committee of state finance ministers. The CBEC will then place the law in public domain and seek comments from industry.
The GST would bring in revenue bonanza for the states and will boost GDP growth, Krishnan said. It is estimated that GST could boost India's GST by 1-2 percent.
The final GST rate would be decided by the GST council, which will be headed by the Union Finance Minister and have state Finance Ministers as members.
Besides the panel under CEA Arvind Subramanian, National Institute of Public Finance and Policy (NIPFP) has also been asked to propose a revenue neutral rate (RNR), or a rate at which there will be no revenue loss to states under the GST regime.
Published Date: Sep 16, 2015 16:14 PM | Updated Date: Sep 16, 2015 16:14 PM