IRS lobby cautions PM Modi over GST flaws


Tax babus don’t want to share the tax collection power with state cadre under upcoming GST regime.

 Even as the Goods and Services Tax (GST) is set to be rolled out from July 1, the elite body of revenue collection officers is vexing Prime Minister Narendra Modi stating that current form of the GST will cost the Central exchequer a whopping Rs 1.10 lakh crore.The new controversy has emerged for the Centre has agreed to allow the states control over most of the small taxpayers.

The Indian Revenue Service (IRS) lobby has cautioned the PM in a letter that GST, in its present form, “may not bring the desired goals”. IRS officials engaged in indirect tax collection are seeing red in the GST Council decision as only 10 per cent of GST taxpayers will be assessed by the Centre, whereas the states would handle 90 per cent, with up to Rs 1.5 crore turnover.

The GST Council, headed by Union Finance Minister Arun Jaitley and comprising representatives of all states, had in its meeting on January 16 agreed that 90 per cent of tax assessees below Rs 1.5 crore annual turnover would be assessed by states and the remaining 10 per cent by the Centre. Those above Rs 1.5 crore will be assessed 50:50 between the Centre and the States.

IRS officials are vehemently against the GST council’s decision, which “seems to be one-sided in favour of states, weakening sovereign function of the Centre regarding levy and collection of taxes,” IRS (C&CE) Association said in the letter to the PM on February 21.

“GST in this form may not bring the desired goals of better tax compliance, more revenues, ease of business and reduction in inflation and an instant spurt in economic growth,” IRS warned in the letter.

At the end of the ninth GST council meeting when the decision was taken, Finance Minister Arun Jaitley said that “we have been able to arrive at a decision on this issue. The entire taxation base will be shared between the assessment machinery of the Centre and the States.”

“Union finance minister addressed CBEC’s concern, which is mainly of the quantity of work to their cadre and false notion of superiority. Even then their further pursuance is nothing but guided by their vested interest and fear of exposure of their so called expertise and superiority after working with laborious and energetic state officials,” a UP State tax official told DNA on the condition of anonymity.

IRS demands

Revision of the division of assessees below 1.5 crore also in the ratio of 50:50

Decision of IGST cross-empowerment may be rescinded and be placed with Centre, as it is not Constitutionally valid

Exclusive role of Centre in territorial waters.

The Chairman, CBEC may be considered for ex-officio Secretary to GSTC and Revenue Secretary and Member, GST, CBEC as permanent invitees

IRS officers may kindly be considered for GST Commissioners in States, instead of IAS

State Tax official’s response:

(As given to DNA on condition of anonymity)

GST is not a project of CBEC it is first Indian indirect tax reform which is subsuming all current indirect taxes at both states and centre level to create a federal tax called GST.

CBEC is trying to depict state tax machinery as weaker than them.

In this letter, they are giving self-certification of successfully implanting service tax without taking into consideration the fact that there are forty percent non-filers in service tax.


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