NEW DELHI, June 30: Industry body CII today expressed the hope that political developments will not overshadow progress made towards implementation of the proposed Goods and Service Tax, an indirect tax regime expected to push growth.
“GST is one of the most awaited reform measures on the table, and the industry hopes that political developments would not overshadow its progress,” said Adi Godrej, Chairman of Special Task Force on Reforms of CII.
The CII in a statement said the new tax law will impart impetus to economic growth.
Commenting on the work of the Empowered Committee of State Finance Ministers, Godrej said the panel has met three times in recent months and there have been positive developments on issues like compensation to states for Central Sales Tax, exemption list and Dispute Settlement Authority.
Sushil Modi who had chaired the Committee has ceased to head the panel following his resignation as Deputy Chief Minister and Finance Minister of Bihar in the wake of the BJP-JD (U) split. The Committee now is headless.
The CII further said GST would bring many key benefits to the Indian economy as well as to producers and consumers by imparting efficiency to the indirect tax system.
“GST has the potential to add as much as 1.5–2 percentage points to the GDP growth rate,” stressed Godrej, adding that given the current slowdown, such a measure is an imperative and is a ready stimulus for the economy.
The CII said the proposed tax law would help in increasing tax base, curbing evasion and raising compliance for both indirect and direct taxes. Better compliance could raise additional tax revenues of almost 20 per cent, it added.
GST was taken up by Finance Minister P Chidambaram in his Budget speech of 2007-08 and was expected to come in force by April 2010. A Constitutional Amendment Bill in this regard has been introduced in Parliament and is undergoing scrutiny by the Parliamentary Standing Committee on Finance.
The CII further said issues like threshold limit, compounding scheme for small traders, taxation of inter-state trade and others still need to be discussed by the Empowered Committee.
The final design of the GST model would depend on the resolution of these pending issues, it added. (PTI)
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