Goods, services tax could boost India Inc's bottomline: Bhide

The Revenue Secretary, Mr P.V. Bhide, with the Assocham President, Dr Swati Piramal,at the National Conference on 'GST - Roadmap to 2010', in the Capital on Wednesday.

New Delhi, Dec. 23

The proposed dual-goods and services tax (GST) system could boost the bottomline of India Inc in an appreciable manner as it will bring down their net burden of taxation by as much as 25-30 per cent, informal calculations made by the Finance Ministry showed.

That the GST would substantially enhance the competitive edge of both the manufacturing and services industry was brought to the fore by the Revenue Secretary, Mr P.V. Bhide, at aconference organised by Assocham here today.

His remarks on the visible advantages of GST come at a time when there are some who still question the wisdom of planned switchover to the dual GST. The GST sceptics feel that the existing VAT system needs some more time to settle down and that the GST introduction should not be rushed through.

Mr Bhide used the occasion to also highlight some of the invisible advantages that needed to be factored in by the GST sceptics. He pointed out that GST could remove the disability that domestic producers suffer from and also equalise the burden between domestic and imported goods.

Currently, domestic industry is subject to a variety of indirect taxes on its output. As the rates of tax and their nature vary from State to State, it becomes impossible to apply these taxes fully to competing products that enter the domestic stream through imports in a WTO-compatible manner.

Mr Bhide said that special additional duty of 4 per cent currently applicable to import of goods does not fully counter-balance all domestic taxes such as Central sales tax, value added tax and others, as the rates of tax on a given product varied from State to State.

Once these taxes are subsumed within GST and the rate of SGST for a product is uniform across the country, a border tax equivalent to that rate would equalise the burden between domestic and imported goods, Mr Bhide said.

Exporting community

The Revenue Secretary also said that the GST regime is likely to confer substantial benefits on the exporting community in so far as it would permit the neutralisation of a substantial burden of State-level taxes suffered on inputs and finished products, which was not the case today. Moreover, this would be true of both goods and services in respect of all State taxes that are subsumed within the GST.


Meanwhile, Mr Bhide said that every effort was being made to pave the way for the introduction of GST in a timely manner. The scope and nature of constitutional amendments that are needed to enable the implementation are under active discussion at the Centre.

Mr Bhide said that the draft amendment Bill has already been prepared and was being examined by experts. Work was also underway on the drafting of CGST law and model legislation for SGST. Progress has also been achieved in the conceptualisation of IT infrastructure that would be required to implement the IGST model for inter-State supply of goods and services.