With the implementation of GST still a long way off, India Inc seems to be getting restless. To begin with, there is still no availability of cross credit on service tax and VAT. Consequently stakeholders are being subjected to double taxation both by the centre and the state. CNBC-TV18’s Ashmit Kumar reports.
Greater the time gap between the introduction of the negative list and the introduction of the GST, the greater the burden on India Inc – this appears to be the message that corporate assesses are sending out to central and state leadership.
The worries stem from the continued unavailability of cross credit facilities for service tax and VAT.
The introduction of the negative list, according to experts, will create wider gaps with respect to generation and use of tax credits, due to the absence of cross credit mechanisms, therefore causing a cascading effect on the indirect tax payout.
Rohan Shah, managing partner at Eco Laws Practice says, “With the introduction of the negative list we have seen that the tax footprint has increased whereas on the credit side, due to various questions on disentitlement, the credit allowed has taken a dip, thereby imposing a greater burden on the industry. Until the GST is not introduced, we are looking at big worries.”
With the political deadlock over GST persisting there is indeed cause for worry. The chairman of the Empowered Committee of State Finance Ministers has assured that the parliamentary standing committee will take up the matter by June 8 and will submit their recommendations before the monsoon session. However, he remained non committal on a deadline.
Sushil Kumar Modi, chairman of GST panel and deputy chief minister of Bihar says, “If the concerns put forth by the states are resolved and if we see more flexibility by the centre, the matter can be resolved. All political parties are on board but for issues such as fiscal autonomy.”
But terming the higher tax payout as a “vicarious liability”, India Inc is arguing against being held hostage by centre-state politics, calling for higher levels of engagement from all sides.
“Political parties need to come together to expedite the implementation of the GST”, says RV Kanoria, president of FICCI.
Moreover, with growth now on a back foot, the implementation of GST could go a long way in powering the GDP by a further 1-2%. Hence experts argue that streamlining of indirect taxes can’t wait much longer.
(curtsey : money control)
Rupesh Yatesh Dalal
Head Research Department