Admitting there were challenges in implementation of the Goods & Services Tax (GST), the finance ministry has formed a study group to examine the possibility of a common tax code for central excise and service tax. Currently, excise and service tax are governed by separate Acts.
“The study team will examine the feasibility and also suggest a draft Common Tax Code for service tax and central excise that can be implemented under the present constitutional scheme, keeping in view the challenges in the context of impending GST,” the finance ministry said in a statement. In his Budget speech, finance minister Pranab Mukherjee had proposed to set up the study team. The tax code could be adopted to harmonise the two legislations “as much as possible at the right time”.
The group, to be headed by retired Indian Revenue Service officer M K Gupta, will give its report by September 30. It would address issues on input tax credits to simplify the existing scheme and mitigate the cascading effect as much as possible. The study team may also suggest measures to reduce the cost of compliance for business or transition towards a comprehensive GST.