The quick approval of the central goods and services tax (CGST) and integrated goods and services tax (IGST) bills by the GST council is yet another major milestone in the efforts to roll out the new tax in the next few months.
This leaves the council to now just finalise state goods and services tax (SGST) and the union territory goods and services tax (UTGST) bills at its next meeting later this month. The pace of rolling out of the GST bill in recent months is a benchmark that the government should follow in other reforms also.
The statement by the West Bengal finance minister Amit Mitra that the central government had allowed the states to incorporate 26 major amendments indicates that the central and state finance ministers have gone out of their way to accommodate each other in their mutual interests.
Yet another major work that remains to be done is the fitment of the various goods and services in the various tax slabs. It is an exercise which calls for maximum caution as care has to be taken to ensure that the burden of the tax on the common man is minimized even while ensuring that the revenue collections are maximized. The ministers should ensure that they resist the pressure of various lobby groups and adopt a rational approach by minimizing tax on inputs and goods of mass consumption.
The CGST bill should reassure trade and industry that at least some of their fears are unfounded. The single point state wise registration of tax payers for filing returns and making payments online will ensure easier payments and also reduce the interface between officials and tax payers.
Similarly, the provisions excluding units with annual turnover of less than Rs 25 lakhs outside the GST (and a lower Rs 10 lakhs in special category states) will keep the small and micro enterprises out of the purview of tax authorities. The simple procedures and lower rates for units with less than Rs 50 lakhs of annual revenues will also help.
The exclusion of farm output is also a welcome provision.
The most useful of the various provisions is the simple input tax credit (ITC) chain which will allow tax payers to seamlessly use it for paying both central and state taxes. This means that tax payers will be able to use ITC entitlement for taxes paid to the center to be cross utilized for tax payments to the states and vice versa.
The provision that allows exporters to claim refund on 90% of taxes paid within a week of their claims will be a big gain for exporters whose capital is usually locked up for long period under existing practices. Similarly the setting up of the advance tax authority under IGST will reduce uncertainties and bring down disputes which is a major bug bear for industry.
Certainly the provisions of the IGST gives hope that the GST would be more tax payer friendly than painted by cynics.