Rationalisation of tax slabs with two-three rates and limited demerit goods in the peak 28 per cent slab, single registration window for service providers and inclusion of electricity, oil & gas, real estate and alcohol under its ambit are key suggestions put forward by the industry to the government for the second phase of Goods and Services Tax.
As GST implementation completes two years on July 1, industry bodies such as CII, FICCI urged the government to take further rationalisation measures to kickstart GST 2.0.
“GST 2.0 will take the Indian economy to the next growth level,” CII president Vikram Kirloskar said.
Stating that the teething troubles related to GST may have been resolved, FICCI president Sandip Somany said there is “now need to move forward to achieve the underlying objective of GST framework of creating a simplified indirect taxation system.”
FICCI claimed it is generally observed that when members of the Advance Ruling Authority are officers of state tax and central tax departments, they tend to be a revenue-biased while interpreting provisions of the GST law and pronouncing a ruling.
The industry body said divergent rulings by different revenue officers in various states has created ambiguity, environment of uncertainty and chaos among taxpayers, suggesting the government should contemplate constituting an independent high-level central body similar to the one under the erstwhile indirect tax regime as ‘Authority of Advance Ruling’ under the GST regime.
Former CII president Adi Godrej said in just two years, GST has consolidated and is delivering notable outcomes for smoother business, lower logistics costs, and easier payment of taxes in digital mode.
“We believe GST will be a forceful instrument for driving economic growth for India in years to come,” he added.
CII director general Chandrajit Banerjee said Indian industry was also really flexible in its approach and that helped in successful rollout of GST, while Kirloskar said the GST Council is proactively examining all issues facing industry and providing solutions.
Somany added the first step should be immediate inclusion of 5 per cent GST on natural gas. “Further, till the time petroleum products are brought within the GST net, suitable amendment should be brought in the excise and VAT laws to allow credit of GST paid on inputs/input services and capital goods against payment of excise duty/VAT to the manufacturers/suppliers of petroleum products,” he said.
With stabilisation of revenues, there is a need to further rationalise the 28 per cent category to only cover demerit goods. From a medium-term perspective, a rate structure of two-three slabs will be welcome and this can also address inverted tax issues, CII said.
It also suggested adopting a single registration process, with IGST for the respective states being paid by such centralised registrants and doing away with GST on cross-charge for services.
CII also recommended that electricity, oil and gas, real estate and alcohol should be included under GST at the earliest, which will lead to seamless input tax credit availability across all sectors, adding that issues in simplification of GST compliances and filing of returns, matching of invoices and getting seamless input tax credit needs to be taken up.