statesman new service
NEW DELHI, 29 JUNE: The Confederation of Indian Industry (CII) has made a strong push for rapid action on the Goods and Services Tax (GST) to impart impetus to economic growth. “GST is one of the most awaited reform measures on the table and industry hopes that political developments would not overshadow its progress,” said Mr Adi Godrej, immediate past president and chairman, special task force on reforms of CII.
Commenting on the work of the empowered committee of state finance ministers, Mr Godrej said: “The empowered committee has met three times in recent months. There have been positive developments on issues such as compensation to states for Central sales tax, exemption list and dispute settlement authority.”
Issues such as threshold limit, compounding scheme for small traders, taxation of inter-state trade and others still need to be discussed by the empowered committee. The final design of the GST model would depend on resolution of these pending areas.
According to CII, GST would bring many key benefits to the Indian economy as well as producers and consumers by imparting efficiency to the indirect tax system. “GST has the potential to add as much as 1.5-2 percentage points to GDP growth rate,” stressed Mr Godrej. “Given the current slowdown of the Indian economy, such a measure is an imperative and is a ready stimulus,” he added.
GST would also help in increasing tax base, curbing evasion and raising compliance for both indirect and direct taxes. Better compliance could raise additional tax revenues of almost 20 per cent, he said.
By instituting consumption-based taxation, GST would make India a single market and ensure free flow of goods. This would create more efficient supply chains and reduce transaction costs, lowering final prices for buyers, Mr Godrej said.
CII is concerned about media reports that a high combined Central GST and state GST rate is being considered. “We suggest that the combined tax rates should not exceed 18 per cent and that exemptions to the GST coverage should be minimal,” said Mr Godrej.