TaxTMI 
TaxTMI 
TaxTMI 
Of late, the business fraternity of India has been obsessed with certain economic reforms that have been in the pipeline for too long now. These reforms, like The Direct Tax Code, a common tax for goods and services, and a new Companies Act are said to contain the potential to transform the entire business scenario and promote the economic prosperity of the nation.
Among these, The Goods & Service Tax (GST) seems to be most promising as it aims to bring in a common tax regime for goods and services by subsuming most indirect taxes prevalent in the economy today.
Needless to say, there has been so much dialogue on GST that it no longer needs to be defined. Simply put, it is a national level Value Added Tax (VAT) on goods and services with one of the differences that it also covers Service under its scope. It would eliminate the burden of all cascading effects of various taxes.
But what is more important is whether we have realized that it is going to change the way business is done in this country forever. According to a report by the National Council of Applied Economic Research, GST is expected to increase economic growth by 0.9 per cent to 1.7 per cent. Exports are expected to increase by 3.2 per cent to 6.3 per cent, while imports will likely rise by 2.4 - 4.7 per cent, the study found.
GST finds its roots way back in 1954, when France introduced a comprehensive goods and service tax regime, becoming the first country to do so. It is a quirk of fate that we struggle to have such rational framework even today, when more than 150 countries in the world already benefit from some or the other form of GST. For us, it has become yet another classic example of how political interests and red-tapism can outweigh even such imminent reforms.
In 2000, Government started discussion on GST by setting up an Empowered Committee of State Finance Ministers. The committee was headed by Asim Dasgupta, (Then Finance Minister, West Bengal). It was given the task of designing the GST model and overseeing the IT back-end preparedness for its rollout.
The all-encompassing GST was mooted again by finance minister P. Chidambaram in Budget 2007-08 to come into force by April 2010. The first discussion paper on GST was released by The Empowered Committee in November, 2009. However, since then we have not been able to achieve the requisite consensus and constitutional amendments required to have this framework. The GST rollout has missed several deadlines. In fact, the newly appointed chairman of the empowered committee Mr. Abdul Rahim declined to give a deadline for the GST’s roll-out, adding that many issues remain unresolved, such as the concerns of states over CST compensation and loss of revenue in a post-GST regime. taxtmi.com
The GST Bill, which was introduced in Parliament in 2010, is currently being vetted by the Standing Committee on Finance. After the committee submits its report, the states and the Centre would together finalize the draft and bring it back to Parliament.
The Constitution Amendment Bill, a prerequisite for GST, is with the law ministry for its opinion. The standing committee of finance has finalized its report on the bill and is expected to table its report in the monsoon session of Parliament beginning 5 August. The draft Bill after incorporating the recommendations and opinion of law ministry will then be circulated to the state finance ministers before it is taken to Parliament.
The time when GST sees the light of the day seems to be distant. Our Prime Minister Dr. Manmohan Singh indicates that GST implementation may prolong till the next financial year when he says, “We will have elections in April 2014... I think there will be a strong effort by whichever government is in power that time to move towards the GST. The implementation is inevitable as there is a general agreement among professionals and all shades of opinion agreed that India needed GST to help its growth story”, he added.
As for now, the business community sets its eyes on the upcoming monsoon session of the Parliament wherein the things are expected to take a shape, further.