The proposed Goods and Services (GST) tax regime is set to bring in biggest business reform, a tax expert said here today.
"GST is just not tax reform. I say it is going to bring biggest business reform," A2Z Taxcorp Executive Director Bimal Jain said at Bharat Chamber of Commerce-organized interaction on GST draft law.
According to him the implications will not be the same for all and depend on how each one does business.
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Jain also called upon the industry to prepare sector wise concerns seriously.
Referring to various concerns of a few sectors on the issue, Jain urged that unless these are corrected they might have to suffer, beside highlighting benefits of GST.
Service Tax Chief Commissioner (Kolkata) S K Panda said concerns should be pointed out quickly to the government so that those can be taken into consideration when the final legislation is drafted.
Panda said that he has raised at several locations of the draft, word service is missing instead of goods and services tax.
"I don't know whether it is deliberate or mistake. I have already raised it," Panda said.
Meanwhile, BCC President Rakesh Shah said government should offer a flat rate of credit for closing stock for those not registered with excise.
According to draft GST those not registered with excise cannot claim stock credit, he said.
The paper mentioned that for the tourism sector at
present, different abatement schemes addressing different situations are available under service tax such as 30 per cent in case of composite package and 60 per cent for dining at a stand-alone restaurant.
It said the differential rates are leading to ambiguity and complexity in determining the value on which service tax is payable, pitching for a uniform tax treatment to overcome such a situation.
Besides, in the current set-up, all the taxes cumulatively applicable to restaurants (i.E. VAT, service tax and other applicable taxes) increase the value on which tax is payable to more than 100 per cent.
"Such a situation increases the tax cost substantially. Therefore, a mechanism should be introduced whereby value on which GST would be applied should not increase 100 per cent in any case," the paper noted.
As for the food processing, it said the industry is taxed at a concessional rate/zero rate. GST is likely to be based on minimal exemptions regime leading to increase in the tax cost for the food processing industry and inflation.
According to the paper, a distinction needs to be made based on the 'necessity' principle as in Canada whereby food products essential for human consumption should be taxed at zero rate.
As food comprises a major part of the wholesale price index-based inflation, an increase in tax on food items will add to the price rise, the paper further noted.
