Business Standard

Panel report on tax code likely by winter session

Image

Gyan VarmaIndivjal Dhasmana New Delhi

There seems to be some hope for the Direct Taxes Code (DTC) to be implemented, but the Goods and Services Tax (GST) may take longer than originally planned.

The standing committee on finance is likely to meet on November 11 on DTC and is likely to table its report towards the fag end of the winter session of Parliament, while it does not seem to be in a hurry to consider an amendment bill to roll out GST.

A standing committee member told Business Standard the panel did not think the government will respond to all their queries on November 11. He said the government might take 10 days to reply, by when the winter session is likely to begin. The committee will then take a month or more to prepare its report, by when the session might be nearing a end.

 

DTC is proposed to come to effect on April 1, 2012.

Among other things the DTC bill proposes zero income tax for income up to Rs 2 lakh, 10 per cent tax on income exceeding Rs 2 lakh and up to Rs 5 lakh, 20 per cent for income of more than Rs 5 lakh and up to Rs 10 lakh and 30 per cent for income over Rs 10 lakh a year.

Unlike the direct tax reform, the fate of GST does not seem to be that rosy, since the panel is not in a hurry to amend the bill for indirect tax reform.

Already, the panel has asked the states to come up with consolidated feedback on GST, and some states like Bihar, have already forwarded their views. Bihar, for instance, has asked that GST should include petroleum as well as alcohol.

"We have suggested that the constitution amendment bill should not mention items to be covered or not covered under the proposed GST," Bihar deputy chief minister and finance minister Sushil Modi said. He said if need arises to include some items in GST, a bill to amend the constitution will again have to be moved, which would be a tedious process.

The constitution amendment bill sought to keep crude, high-speed diesel, petrol, natural gas, aviation turbine fuel and alcoholic liquor outside GST. Constitution amendment bill is just an enabling provision for the centre and states to impose GST, since under the present scheme the centre cannot impose tax beyond manufacturing and states cannot impose service tax.

As such, states and the Centre will have to bring their GST bills in their legislatures and Parliament, respectively. GST will subsume state-level value added tax as well as excise duty and service tax at the centre-end among other small taxes. It is now more or less a foregone conclusion that GST, which has already missed two deadlines, cannot be implemented from April 1, 2012.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Oct 25 2011 | 12:32 AM IST

Explore News