The Chief Minister thanked the members of the assembly for supporting the resolution.
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Once implemented, India’s biggest indirect tax reform since Independence, the GST will subsume 11 types of Central and state levies into one indirect tax. “It is an open secret that the dealers are collecting and deposit of tax on behalf of the Government by rendering services without any remuneration”, Khandelwal said in statement. Ratification of at least half of the total states was mandatory before the President can notify the GST Council, which will decide on GST rates. So, companies like Flipkart, Amazon India and Snapdeal are only service providers to the vendors and are liable to pay GST only on service income.
As per the panel, the end consumer who is buying ecommerce products end up paying VAT; the producers of the goods pay excise duty; but the ecommerce firms deny paying tax claiming that the transaction is “just a pass through”. “Others may follow suit”.
The government now faces the toughest job of fixing the GST rate.
Industry, according to a PTI report, is pitching for 18 percent standard rate as it feels this is the rate that would generate adequate tax buoyancy without fuelling inflation. FICCI representatives said that the merit rate should be lower and the standard rate should be reasonable.
The government, however, came in for strong criticism for not consulting the opposition political parties about the special session of the assembly on GST. He further suggested that tax practitioners working with the dealers under current VAT regime may be allowed to audit and prepare returns under GST law and as such suitable provisions may be made under Section 42 and 86 of the proposed Model GST Bill. The Goods and Services Tax Council, in which the Centre has one-third weight and the states two-thirds, will work out the details of the law which is expected to be moved in the winter session of Parliament.
Industry chamber CII (Confederation of Indian Industry) addressing the Empowered Committee hoped that the GST rate would be kept at 18 per cent.
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A detailed GST law now needs to be worked out, laying out the rules by which the new levy will be imposed and also the rate that will be applied. “Certain goods will be exempt from GST while bullion and jewellery would be charged to 1 per cent/2 per cent”, FICCI added regarding classification of goods for applying GST rates.
