BUDGET WISHLIST: Time for a roadmap for GST

EXPERTSPEAK

In the last Budget, the central government had set out its commitment to introduce a national level Goods and Services Tax (GST) from April 1, 2010. Budget 2007 should therefore manifest and reiterate the government's commitment to the GST by setting out a specific roadmap for its introduction.

The idea of a uniform VAT/GST across goods and services by 2010 reiterates the need for harmonisation, to start with, at the federal level, of the two taxes that operate, i.e. the Cenvat and the service tax, in terms of both a single rate as well as a single tax code. A harmonisation of these two taxes would remove the duality of goods and service taxation at the federal level.

This is imperative and it is hoped that this year's Budget will significantly advance this agenda. However, a much more important step in relation to the introduction of the GST is at the state level. For a successful implementation of the national level GST, it is necessary that the Central Sales Tax (CST) is phased out.

With the states and the Centre reaching a broad consensus on the phasing out of the CST and the compensation package to the states on account of the revenue loss thereof, Budget 2007 should, without fail, announce the desired 1 per cent cut in the CST rate from April 1 this year and a roadmap for further reductions so as to completely abolish the tax by 2010.

A related point of the CST phase out is the provision of additional taxing powers to the states. Here, broad consensus has been arrived in regard to:

a) taxation of a defined set of services by the states and

b) imposition of a state VAT on imports, in addition to the present VAT on indigenous sales/purchases.

The writer is leader, indirect tax practice, PricewaterhouseCoopers

CEOSPEAK: A K Taneja, Shriram Pistons & Rings Ltd

"India has to adopt a moderate and rationalised tax structure to align with Asean nations and China and come up as an economic powerhouse in the global arena". (BS Reporter)

CHAMBER SPEAK

CII
All states and union territories except Uttar Pradesh and Pondicherry have implemented VAT. The CII hopes Uttar Pradesh and Pondicherry will also shift from the Sales Tax regime to VAT in the near future. Phasing out of the Central Sales Tax (CST) at the earliest is the main concern of industry at present as CST gets embedded in the cost structure and it is quite contrary to the spirit of the VAT regime.

FICCI
Since the intention of the government is to put the GST in place from April 1, 2010, it is important for the government to bring all items under the ambit of the VAT regime. Ficci has suggested that petrol and petroleum products be brought under the VAT regime with a maximum rate of 12.5 per cent across all states. (BS Reporters)