If goods and service rates are high, people won’t accept it. Especially, the government cannot make service tax more than 20 per cent which is 14 per cent at present, as the sector would collapse.
India needs a good Goods and Service Tax (GST) after collecting public opinion, Central Board of Exercise and Customs former chairman Sumit Dutt Majumdar said.
Delivering a special lecture on ‘Road map to GST’ about proposed Goods and Service Tax Bill here at Kanara Chamber of Commerce and Industry (KCCI) on Thursday, he said one cannot define the GST as good or bad. Canada has the best GST, while Brazil has the worst.
At international level, GST differs from two per cent to 20 per cent. But, India can not tolerate a tax more than 20 per cent, he said.
During the implementation of the Goods and Service Tax, consultation of people is very important. Rather than goods, service is intangible and it should be put on the public domain.
People should be trained in information and technology abilities. The government should pass the Bill in this monsoon session, so that it can be implemented from next April, he said.
What is GST?
India is a federal democracy, so the Centre can not collect tax and distribute to states or states can not collect tax on their own. This proposed one is a dual model, where the Central government collects its tax and states collect theirs.
If there is transport from one state to another, the tax collection will be done based on the destination. In the present system, customers have to pay tax on tax (for input and product). Moreover, taxes differ from state to state, which has become a hindrance to common economic market system, he said.
The GST will avoid the hidden tax or tax on tax. The compliance cost would be lesser as only two agencies would collect the tax.
The money will collected by states and they can spend there only. There is scope for the development of manufacture sector which would help in solving unemployment problem.
Sumit Dutt Majumdar claimed that few changes that the new government made in the Bill were needed. Now, only the states or the Centre cannot take a decision on tax. Centre and one third of the vote from states is mandatory to pass a decision.
States are worried as if petroleum products are included under the Goods and Service Tax, it would affect their revenue as states get 50-52 per cent of revenue from petroleum. Now, GST council would decide on the issue.
The government has kept alcohol out of the GST. The one per cent transport tax is a bad thing in the Bill, he said.
Central Excise and Service Tax Commissioner Dr M Subramaniam, DVO Commercial Taxes (Admin) Joint Commissioner Dr L Sathish Kumar, KCCI president Nigam B Vasani were present among others.