The open letters by chief ministers Jayalalithaa and Shivraj Singh Chouhan to the Prime Minister once again emphasise the formidable challenge of building a consensus between the Centre and the states on the Constitutional (Amendment) Bill for the Goods and Services Tax (GST). Even if the governments do reach an agreement, it is not a framework that would bring cheer to industry or serve the needs of the Indian economy in the 21st century. What is needed is an alternative framework, which is politically appealing and economically attractive.

Alternative framework needed to break political impasse on GST

Business Standard

The Shome Committee report is a triumph of democracy over tax bureaucracy. The Committee&rsquo;s recommendations to severely restrict the scope of GAAR, and to abolish tax on gains from transfers of listed shares are bold and far reaching. They are a breath of fresh air in an environment of despondency and gloom surrounding unprecedented retrospective and retrograde tax changes enacted in the last Budget.They establish supremacy of rule of law over indiscriminate tax bureaucracy. The Committee describes GAAR as &ldquo;an extremely advanced instrument of tax administration&rdquo;, meant to deter misuse or abuse of tax law through complex and contrived arrangements. However, without adequate safeguards, it could become an instrument of abuse in the hands of inapt tax officials, deterring voluntary compliance by law-abiding taxpayers.

Satya Poddar: Shome Committee sends out positive signal

One of the arguments put forward by the Finance Minister in defending taxation of Hutchison - Vodafone type transactions is that capital gains on the transactions may not be getting taxed anywhere and should be taxed in India as they arise from the assets located in India. This argument, if valid, could indeed be persuasive in defending the Budget 2012 proposals. However, the premise underlying this argument, that such income is taxed nowhere, is questionable. In fact, capital gains on shares represent income that has already been, or will be, taxed in the country where the corporate assets are located. They are not tax-free income, but after-tax corporate earnings.

Satya Poddar: Taxation of share capital gains in source countries questionable

One has to applaud the endorsement of the &lsquo;negative list&rsquo; concept for the taxation of services by the Empowered Committee of State Finance Ministers. It paves the way for simplified design of the goods and services tax (GST), as it would obviate the need for defining individual services being taxable.

Satya Poddar

Satya Poddar

Page 2 - Satya Poddar

Alternative framework needed to break political impasse on GST

Satya Poddar: Shome Committee sends out positive signal

Satya Poddar: Taxation of share capital gains in source countries questionable

States' conditions for approval of negative list tantamount to rejection