Services spared from extra tax during GST transition

The government on Tuesday said that the services sector will not be charged extra tax levied during the transitional period of the implementation of the goods and services tax (GST).

According to Rashmi Varma, special secretary, revenue, in the finance ministry, the one percent additional tax which is proposed to be levied during the transitional period of GST for two years will not impact services sector.

Verma, who was addressing the CII (Confederation of Indian Industry) Big Picture summit held here, elaborated that the additional levy will only be charged on the manufacturing sector.

The special secretary assured the media and entertainment (M&E) industry that the soon-to-be-implemented GST will be a game changer for the sector.

"Multiplicity of tax will go in one stroke. Entertainment, services and goods tax both at the Centre and states will be built into one -- making compliance hassle free."

However, the entertainment tax levied by local authorities like panchayats and municipalities will remain, she clarified.

"But, the share of such taxes to the total tax collected would be insignificant. Close to 99 percent of the taxes levied under the Centre and state dispensation would be merged with GST," Verma said.

She assured the industry that under the GST regime, goods and services would be taxed uniformly.

The industry had voiced concerns over the lack of definitional clarity between goods and services, tangible and intangible goods.

Verma said all industries would be eligible to take credit under GST to set off against other tax liabilities.

"We are working on the transition roadmap, so that the change-over hiccups will be minimal and if there are any concerns remaining, the GST Council, which will be set up after the constitutional amendment, will look into it and take corrective actions," she said.

Besides the ongoing process, the top finance ministry official mentioned that a fourth draft proposal on returns will be put in public domain to seek the views of all stakeholders.

The ministry plans to place a model legislation in public domain by mid-November. It also plans to hold regional workshops to elicit the views of the industry associations at the apex and state levels.

Verma said there would not be any concessions or incentives schemes under the GST regime.

"The states which want to continue with the fiscal concessions for specified sectors could do so, setting apart resources from their own kitty," she said.

She added that no final decision has been taken on GST rate.

"The slabs under the GST would be minimal - one low and the other high and in between a standard slab - to keep the cascading effect to the minimal and easy to comply."

"It is not in the sinful list, I can assure you that," Verma added