Govt would drastically prune the list of exemptions
The government would soon roll out a final draft of the goods and services tax (GST) bill and drastically prune central exemptions, a senior finance ministry official said on Thursday.
"The government will roll out the final GST draft paper in the public domain very soon," said Rashmi Verma, special secretary in the department of revenue, at a conference organised by the PHD Chamber of Commerce.
Verma added the government would drastically prune the list of exemptions, now being enjoyed by business.
The Centre's excise duty exemption list of around 300 items will be reduced to 90 items, in line with exemptions allowed by states from value-added tax.
States exempt unprocessed goods and those consumed by the poor like fruit, vegetables, salt, grain and coarse fabric.
The list of services exempt from levy will be reduced to include only essential services like health and education.
Reduction in exemptions would result in a seamless flow of GST and substantially arrest its cascading effect, Verma said.
Najib Shah, chairman, Central Board of Excise and Customs (CBEC), also said tax exemptions extended to business for expansion and diversification would have to go with the GST legislation becoming a reality.
The Congress has blocked passage of the Constitution amendment Bill for GST in the Rajya Sabha over key demands, including scrapping of the one per cent additional tax on interstate sales and incorporation of an 18 per cent peak tax rate within the Bill. The GST rollout is expected to be delayed beyond its target date of April 1, 2016.
"The journey towards GST has been long. We will have to see whether it (the Bill) is passed in this session or in the coming Budget session. But, I can say with full confidence that GST is going to be a reality very soon," Verma said.
"GST will subsume all indirect taxes like excise duty, sales tax and service tax. We have set the goal of rolling out GST in 2016," Verma added.
Finance Minister Arun Jaitley on Wednesday, in an address to business representatives, hinted at accepting the Congress demand of scrapping the one per cent additional tax for interstate sales, but stood firm on not incorporating the ceiling tax rate in the Constitution amendment Bill. He added the standard rate under GST, which would apply to a majority of goods, would be less than 18 per cent.
Chief Economic Advisor Arvind Subramanian has recommended a low GST rate of 12 per cent, a standard rate of 17-18 per cent, and a high rate of 40 for demerit goods like aerated drinks, luxury cars and tobacco.
Business Standard, New Delhi, 18th Dec. 2015
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