Madhya Pradesh Finance Minister Raghavji has revised the tax collection estimates from GST, which is scheduled to be effective from April this year, and has put them at only Rs 14 lakh crore against the central government calculations of more than Rs 30 lakh crore.
“There are flaws in calculation of tax base (GST) and it will not only put states and the Centre in trouble but commoners will be the most affected,” principal secretary, commercial tax department AP Shrivastava told BS.
Citing examples he said wizards who had calculated the GST base had ignored very peculiar issues. Food and drinks served in restaurants were already taxed under VAT and no additional tax base would be available in GST from private final consumption expenditure under the head ‘hotel and restaurant’ over and above the tax base of VAT. Domestic services would not contribute to any tax base. Under ‘medical and health services’ head, Rs 152,296 crore would be exempted in GST and so it would also not contribute to the tax base.” “Public transportm being taxed, is essentially used by the low income group; it is more fuel efficient and is generally subsidised by governments. On the other hand, personal transport used by the rich will not be taxable in GS”, he said adding, “The Centre has ignored the fact that “taxes on goods and passengers carried by road or on inland waterways” has assigned the taxation power relating to bus transports to states, and substantial revenue is raised through motor vehicle tax. This expenditure will not contribute to the tax base in GST.” “Its taxation in GST even in future will not be justified on environmental considerations.”
Other points which Raghavji is likely to raise include banking charges (Rs 68,631 crore), which essentially involve interest payment by households on loans for house-building or purchase of consumer durables. It is generally not taxable in GST. His points seems carrying healthy logic as the collection of service tax from banks was hardly Rs 3,700 crore in 2007-08 indicating a tax base of Rs 30,000 crore only. Even this base is essentially from trade and industry and not from households. Therefore consumption expenditure under this head will not contribute to the tax base in GST.
Other points on which others states may also agree are; the expenditure under ‘life insurance’ head. Rs 31,517 crore is the amount of annual premium collected by insurance firms and is not taxable in GST.
