New Delhi: The Rajya Sabha on Wednesday took up the four bills related to the goods and services tax (GST), with the Opposition questioning the government’s preparedness to implement the indirect tax regime and urging for a mechanism to insulate taxpayers from harassment by tax authorities.
Initiating a debate on the bills, deputy leader of Congress Anand Sharma said, “It is important that as you go for implementation, both the Centre and the state governments should create an institutional mechanism which protects or insulates the taxpayers from harassment."
He said the government should not create multiple windows of tax harassment, search, seizure and arrests which is “already happening". “If it leads to that situation, then surely you will not be helping the economy and the industry nor the consumers," the former Union minister said while speaking on the debate on The Central GST Bill, 2017; The Integrated GST Bill, 2017; The GST (Compensation to States) Bill, 2017; and The Union Territory GST Bill, 2017 which were passed by the Lok Sabha last week.
Sharma urged finance minister Arun Jaitley and the GST Council to keep most of the goods, which are used by the common man, at the tax rate of 5%. He said the government should “resist the temptation" to bring maximum goods and services under the rate of 18%, cautioning that such a move will be inflationary.
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A moderate rate would facilitate compliance, he said. “Are we actually going to create an efficient tax structure, reduce the burden of compliance, ensuring that the final GST rate will not be too high? I have my doubts. It is because multiple GST rates have been introduced," he said.
He also raised concerns about the government’s preparedness to implement the GST in the midst of the financial year, saying there is hardly any time left now as the Government is keen to roll out the indirect tax reform from July 1.
He also asked whether the government will subsume all the multiple cesses that have been imposed in the past into the GST, terming these as an “additional tax burden". “When we look at the global scenario, the GST rate is below 18%," Sharma said. He said there is no safeguard clause and no proposal on how the government will address inflation arising out of the implementation of the GST.
If the government keeps the Service Tax at the model GST rate of 18%, it will translate into a 3.5% increase, which will be “hugely inflationary", he said. Sharma said the GST negates the ‘ease of doing business’ environment as businesses will need to acquire registration in every state they wish to operate in. He suggested the government to set up a comprehensive registration authority.
He said the harsh provisions related to the recovery of tax should not be implemented during the transition phase of the GST. Sharma also sought to know what will happen to the exemptions given to North East and Special Category states and the Special Economic Zones.