Need to undertake next level of reforms in the GST framework to enhance the ease of doing business in India in true sense: Sandip Somany, President, FICCI
NEW DELHI, 30 June 2019: FICCI congratulates the Government on completion of two years of implementation of Goods and Services Tax (GST). "It has been a landmark taxation reform in Indian history and given the set of challenges associated with implementation of reforms of such magnitude, the government?s proactive response to those challenges is praiseworthy," said Mr. Sandip Somany, President, FICCI.
"Both Central and State governments have taken industry's concerns into consideration and resolved the same timely, which gives immense confidence to the business fraternity that we are on the right path. The way the GST Council and tax administrators have worked in the last two years, continuously aiming towards bringing simplification, rationalization of rates and broadening the base under GST regime is praiseworthy," added Mr. Somany.
"Some of the recent announcements have also been directed towards easing compliances, especially the roadmap for the transition to the new simplified return system, enhancement in threshold limit for registration of supplier of goods from Rs. 20 lakhs to Rs. 40 lakhs, and extension of composition scheme to the service providers," added Mr. Somany.
"While we acknowledge that the teething troubles related to GST implementation may have been resolved, we now need to move forward to achieve the underlying objective of GST framework of creating a simplified indirect taxation system. This would require undertaking next level of reforms in the GST framework that would in true sense enhance the ease of doing business in India," said Mr. Somany.
Mr. Sandip Somany highlighted some of the key areas that the Government should consider in the third year of GST implementation.
- The most critical action would be to ensure 'one nation one tax' by including all sectors under the ambit of GST. The first step should be immediate inclusion of GST @ 5% on natural gas. Further, till the time petroleum products are brought within GST net, suitable amendment should be brought in the excise and VAT laws to allow credit of GST paid on inputs/input services and capital goods against payment of excise duty/VAT to the manufacturers/suppliers of petroleum products.
- The GST Council should now consider converging the existing band of GST rates to three in line with international standards. This will help to resolve interpretation issues regarding classification of goods and consequently reduce complexity and probability of disputes, eventually leading to simplification.
- There is a need to consider 'Zero GST Rating' for the healthcare sector.Since healthcare services are exempt under GST currently, healthcare providers cannot claim input tax credit, despite the increase in the rates of tax for inputs and input services that have increased the cost of healthcare services. ?Zero GST Rating? for the healthcare sector would ensure that input tax credit is available for refund for the healthcare providers.
- To ease the compliance burden for services sector, there is a need to have centralized GST registration similar to erstwhile service tax law. The state wise registration has increased the cost of compliance and business process development manifold.
- Given that the tenure of National Anti-Profiteering Authority was initially prescribed for a two-year period and with GST law largely been settled, it is expected that by the end of the third-year major issues emanating from introduction of the law will be ironed out. Therefore, the prices of goods and services should be left to be decided by the market forces and the provision of anti-profiteering in the GST law should be discontinued with prospective effect.
- To strengthen the consultative approach adopted by the government, it is recommended that a mechanism may be developed wherein an opportunity at least twice a year may be provided to the stakeholders to present their views to the Fitment Committee and Law Committee justifying the rate rationalization and policy changes required under the GST laws.
- It is generally observed that when members of the Advance Ruling Authority are officers of state tax and central tax, there tends to be a revenue-bias while interpreting the provisions of the GST law and pronouncing a ruling. Moreover, divergent rulings by different revenue officers in different States has created ambiguity, environment of uncertainty and chaos amongst the taxpayers. Government should thus contemplate constituting anindependent high-level Central body (similar to the one under the erstwhile indirect tax regime) as ?Authority of Advance Ruling? under the GST regime.
FICCI MEDIA DIVISION
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