New Delhi: A roadmap for Goods and Services Tax (GST) will help improve efficiency in tax administration while reducing cost of tax compliance, according to an India specific model proposed by the Confederation of Indian Industry (CII).
This would eliminate taxes leading to cascading and distortionary effects and improve efficiency in tax administration with lower cost of compliance for taxpayers. It will also carry forward public finance reforms.
An efficient, simple and buoyant tax system is essential for improving the state of public finances through better revenue collection. A buoyant source of Government revenue is of immediate importance to fund its plans on inclusive growth.
* GST must be simple to administer with efficient tax collection and credit disbursement mechanisms
* Ministry of Finance has been urged to enable constitution of suitable model of GST in India
*India to have only two indirect taxes: GST (Central GST & State GST) and Property tax. Central GST to include central excise, service tax and education cess while State GST to include combination of all taxes presently levied by the state and octroi by municipalities. CST needs to be phased out before introduction of GST
* Both Central and State GST to be levied on common base price from manufacturing to retail stage on goods and services
* Tax on sale of property to be levied on value addition under state GST and not on total amount as applicable presently
* Municipalities to get financial support from states to meet expenses and allowed to impose only property tax
* Responsibility of tax collection to be divided to reduce cost of compliance
*Create nationwide clearing house mechanism to facilitate transfer of Central and State GST and allow credit for tax paid
* Selection of services for imposing GST to continue with Central Government and States to be allowed to collect dual GST on certain services, that are directly consumed (beauty treatment, health club). Dual GST to be levied on imports with facility of credit for tax paid
* Exports to be zero rated (no tax element in price of goods exported)
* Tax collecting authority to be responsible for refunds, where admissible and these to be given based on periodical return within stipulated time frame, not exceeding periodicity of return
* Consumer, actual taxpayer, to be able to find element of total tax paid