Budget hopes for consensus on GST

While promising to bring to the House a draft Bill on the Constitutional amendment and a draft Bill on GST over the next few months,the finance minister also paved way for smooth rollout of the tax by leaving excise duty and service tax rates unchanged.

Later in the day,while addressing the media,Chidambaram explained that this was to show his commitment to GST. While refusing to come out with a fresh deadline for the tax,he said,I hope to meet the state governments soon to iron out further issues so that we can bring the draft bills on the tax in the next few months. It was originally scheduled to be introduced from April 1,2010.

In a recent meeting with the empowered committee of state finance ministers,the Union finance ministry resolved the contentious issue of CST compensation and agreed to pay Rs 34,000 crore as dues for phasing out CST.

Welcoming the move,Naina Lal Kidwai,president,Ficci said,This is a step to reach out to the state governments to resolve the impasse over this issue. However,a clear road map on the introduction of GST still remains elusive.

For 2013-14,the basic indirect tax rates have been left unchanged even as the Budget has tweaked tax rates for a number of items that will help yield Rs 4,700 crore in revenues.

The peak rate of basic customs duty has been retained at 10 per cent for non-agricultural products,while the 12 per cent rate for service tax and excise duty has also been kept unchanged.

Overall,on the indirect tax front,the focus this time seems to be more on stability and dispute resolution. As regards GST,for obvious reasons,no roadmap has been suggested but there has not been any major announcements on steps which would take us closer to GST, said Prateek Jain,partner,indirect tax,KPMG,adding that some proposals have fallen short of industry expectations.

Auto companies have been served a double whammy in the Budget. Excise duty on sports utility vehicles has been increased to 30 per cent,while all luxury vehicles,including super bikes will attract 100 per cent import duty.

The Budget has also proposed a one time Voluntary Compliance Encouragement Scheme for service tax defaulters. A defaulter may avail of the scheme on the condition that he files a truthful declaration of service tax dues since October 1,2007 and makes the payment in one or two instalments before the prescribed dates.

Highlighting that only 7,00,000 out of the nearly 17,00,000 registered service tax assessees were filing returns,Chidambaram said,We cannot go after each of them. I have to motivate them to file returns and pay the tax dues.