Working Paper, “GST Reforms and Intergovernmental Considerations in India” The Government of India has initiated a working paper series to improve economic analysis and policy formulation. GST Reforms and Inter Governmental Considerations in India, by Satya Poddar (Partner, Ernst & Young India Tax Policy Advisory Group) and Ehtisham Ahmed (LSE), is the third working paper in the series and the first on the principles, issues and procedures in implementing a Goods and Services Tax in India and carrying forward the tax reform agenda of the country. Click here to read the working paper published by the Department of Economic Affairs in the Ministry of Finance of the Government of India.
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Understanding GST Understanding GST is a 6 part series of articles on Understanding the Goods and Services Tax in India, authored by Satya Poddar, Partner, Policy Advisory Group, Ernst & Young India and published in the Business Standard.
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Part I - Constitutional Amendment
A Constitutional amendment is a prerequisite to introduction of GST. Many options are being considered by the Government to deal with this issue and achieve the balance between harmonization and fiscal autonomy (pdf, 194.3kb) of the States. | | Part II - Revenue Neutral rate
A single and reasonable GST rate would be the most fundamental aspect for the success of GST design. However, the States continue to have concerns about revenues and favor a high revenue neutral rate (pdf, 213.9kb) with lower rate for essentials. |
Part III - Financial Services
There has been a rapid expansion of the financial services sector across the globe. It would be a challenge to decide about the tax treatment of these services under GST (pdf, 118.7kb), particularly in view of the difficulty in determining the tax base. | | Part IV - Real estate
The real estate sector (pdf, 178.8kb) is the foundation of almost all industrial/commercial activity and constitutes large proportion of personal consumption expenditure. Given the multiplicity of taxes that this sector is subject to, its exclusion from GST ambit would lead to tax cascading, distortions and erosion of tax base. |
Part V - Supply Chain
Currently the supply chain structures are beset with numerous complexities and are guided more by tax considerations than operational efficiency. GST would make the supply chain tax neutral (pdf, 138.6kb). | | Part VI - Health & Education
Health and education have been identified as the priority sectors by the Government. It is therefore important that these should be included in the GST purview (pdf, 340.5kb). Granting exemption to the two sectors would mean higher and regressive tax burden. |
You may access the links provided below to access some of our recently published articles. |
Proposed Point of Taxation rules spark debate
While the rules take us closer to the GST roll out, stakeholders at various forums differ on its impact.
First Published in The Economic Times | | Significance of effecting GST amendments in India
The proposed changes in the goods and services tax (GST) may impact evolution of the Indian federation substantially.
Reprinted with the permission of Mint. All rights reserved throughout the world. |
GST to impact indirect taxes
Inception of GST to benefit most goods as indirect taxes would be reduced. Read Heetsh Veera's views on this.
Reprinted with the permission of The Indian Express Limited © 2009. All rights reserved throughout the world. | | Realising the GST potential
What features in the GST design (pdf, 677.7kb) would be essential to help realise its potential? Satya Poddar discusses the important issue. (BT) |
No dissent on GST
The political willingness in India to spearhead a tax reform such as GST, which would require all the States to come together, is truly outstanding. It is the process of planning and preparation (pdf, 408.8kb) that needs to be strengthened. (IE) | | Real estate and GST
It is important that real estate be brought in the ambit of GST (pdf, 215.6kb) to correct the current system of cascading taxes and provide relief to the common man. (HT estate) |
Finance Commission report on GST flawless
The Thirteenth Finance Commission Task Force on GST released its Report on 15 December 2009, suggesting a model for flawless GST (pdf, 342.6kb). The well designed features of GST outlined by the Task Force could lead to tremendous simplification and rationalisation of the current tax structure. (BS) | | GST to eliminate inefficiencies of existing system
The TFC Task Force Report on GST is the closest India could get to implementing a classical GST regime (pdf, 400.1kb). Various issues now need to debated by the stake-holders to have a robust GST design. (FE)
Reprinted with the permission of The Indian Express Limited © 2009. All rights reserved throughout the world |
GST for ‘sin products’ will benefit economy, government
‘Sin Products’ such as alcohol and tobacco are currently excluded from sales tax. However, they are subjected to high rates of tax in other areas such as excise. One consideration in applying GST to them would be ease of administration and simplicity. Read (pdf, 547.4kb) on to know more. | | GST… the biggest reform in Indirect Tax
On 7 July, 2009, the Indian finance minister, Pranab Mukherjee, reiterated the government's commitment to introduce the Goods & Service Tax (GST) from April 2010. The GST would entail significant changes for both government and business and is set to become one of the country's biggest tax reforms ever. To help different stakeholders better prepare themselves for the new GST regime and comprehend its different facets, Ernst & Young wrote a series of thought leadership articles in the Financial Express. Read to know more.
Reprinted with the permission of The Indian Express Limited © 2009. All rights reserved throughout the world |
Can Centre, State meet April 2010 deadline for GST?
The deadline for the rollout of GST has been set at April 1, 2010. However, the preparations for the same are running behind schedule. Though there seems to be a political consensus on the issue, the details of implementation are still not clear. Read (pdf, 130.3kb) on to know more. | | Taxation of goods and services
One of the key objectives of GST is seamless, unified taxation of goods and services. While currently, services are taxed separately by the Centre, the line between goods and services has been blurred by the advent of the new economy. GST must aim to simplify this aspect. Read (pdf, 232.4kb) on to know more. |
Harmonizing GST laws is essential
In recommending a state VAT, the Bagchi committee report recognised that it was not a perfect solution but was a feasible option within the framework of the Constitution and would lay the foundation for an even more rational regime in future. The Centre and States have now embarked on implementing this more rational regime, in the form of a dual goods and services tax (GST), to be levied concurrently by both levels of government. Read (pdf, 643.9kb) on to know more. | | Sectoral changes may need to be ironed out
The implementation of GST throws up complex issues in certain sectors of the economy. For instance, most modern economies tax real estate and land. India could also consider taxing supplies by public bodies and organizations. Read (pdf, 570.8kb) on to know more. |
Tax on food is a necessary evil
Food occupies a large part of the consumer basket in India. Thus, taxes on food acquire importance in the context of reform proposals. Various options are available to the GST drafters such as zero rating of food, exempting of unprocessed food and so on. Read (pdf, 539.4kb) on to know more. | | A sigh of relief for the FMCG sector
The FMCG sector commands a large share of the consumption basket and is hence, critical to the Indian economy. The current tax structure is complex as the Centre and the States tax at varied rates. The GST reform represents an opportunity to rationalise the tax regime as it relates to the FMCG sector and presents a simplified, beneficial structure to the industry as a whole. Read (pdf, 616.5kb) on to know more. |
Monitoring of inter-state supplies
GST reform offers us an opportunity to free inter state trade by eliminating barriers and offering a simplified system of compliance. The destination tax principle offers us a viable alternative for regulating inter state transactions. Read (pdf, 250.8kb) on to know more. |
