The Union Government is making ‘an honest endeavour,' as stated by the Finance Minister, Mr Pranab Mukherjee, to introduce the goods and services tax (GST) all over the country by April, 2011, according to Mr S. Dutt Majumder, Member of the Central Boardof Excise and Customs. Mr Majumder, one of thekey policy-makers involved in the introduction of GST, was speaking at a seminar on tax matters, jointly organised by the TaxLaw Research Group, Vizag, and Tax India Online, here onMonday. He said Mr Pranab Mukherjee, had stated in his Budget speech that thedirect taxes code would be introduced from April, 2011, and the Government would make ‘an honest endeavour to introduce GST from the same date.' He explained why the Finance Minister was so cautious about the introduction of GST, as there were still a number of issues to be sorted out between the Centre and the States. However, all were agreed that the introduction of GST would be beneficial to all. "Some states have expressed certain apprehensions about it and we are trying to sort out the issues,” he said. Objectives The main objectives of the introduction of GST would be to widen the tax base and to eliminate the cascading effect (or tax on tax). “Even the introduction of VAT in all the States, Uttar Pradesh being the last, has not resulted in rationalisation of tax structure and complete removal of the cascading effect,” he said and added that only GST could achieve that. However, Mr Majumder said the concurrence of all States was necessary. “It is possible that some states may lose revenue with the introduction of GST, but they can be compensated,” he said. Some states such as Punjab and Haryana, he said, were raising objections to the removal of purchase tax, as it would be subsumed in GST and the two states would stand to lose almost Rs 1,000 crores. “Similarly, Maharashtra is not willing to let go of octroi. These issues will have to be addressed,” he said. He explained that the Constitution would have to be amended for the introduction of GST. He said there were certain legal issues as well, as fiscal federalism would have to be safeguarded. Further, there was also a need for robust IT infrastructure to manage the larger tax base after the introduction of GST. Mr. Majumder said several countries in the world had a dual GST regime and India would be one of them. “Ideally, of course, there should be a single GST and there should be a single collecting agency. But in the Indian context it is not possible. We should, therefore, aim for the possible, not the ideal,” he argued. Mr D.P. Nagendra Kumar, Commissioner, large tax units, Bangalore, spoke about service tax issues. Mr G. Prabhakara Sastry, Convener of the Tax Law Research Group, Vizag, welcomed the guests. Mr Chandrahas Mathur, Chief Commissioner of Customs and Excise, Vizag, and Mr Shailendra Kumar, Editor of Tax IndiaOnline, also spoke about the Budget proposals.
