Budget paving way for moving into GST regime

04 Mar '16

4 min read

The Union Budget 2016-17 is aimed to bring the huge chunks of industry including area-based exemptions together with SSI, edible oil, textile sectors and others into the tax net in a most easy manner, a top Finance Ministry official said at an Assocham event in New Delhi.

“Out of the GDP Rs 110 lakh crores and manufacturing sector contributing about 17 per cent to it, we have huge chunks of industry which is out of the net,” said Najeeb Shah, Chairman, Central Board of Excise and Customs (CBEC) while inaugurating a post-budget seminar organised by Assocham.

“Area-based exemptions, it is one lakh plus crore which is out of the net, SSI, edible oil, textile sector, these are huge chunks of industry,” said Shah.

“If we are talking of GST, we are now talking of all these sectors having in to move towards the tax net, how else are we going to have a GST?” he asked.

He expressed surprise at tax exemption demands by the industry even with the GST on the anvil.

“The industry supports GST but very, very surprisingly, keeps expecting and wanting exemptions, the two do not go together, every time there is a break in the CENVAT chain, you have a problem, you have tax sticking on to some products, which the next man has to bear and there is no reason why you should bear it,” added Shah.

The CBEC boss said such a line of thinking was behind decision to slowly bring these sectors into tax net and the government believes these are essential steps to move towards GST.

Talking about the CENVAT credit rules, he said that more than 10-12 per cent of the litigations were because of two specific rules in the CENVAT i.e. Rule 6 and Rule 7, that have now been completely revamped. “We have tried to simplify them to the extent possible.”

“We are expecting a hit of more than Rs 1,000 crores only because of the CENVAT credit rule changes, in terms of simplification, we thought it is something essential, because the cost of litigation was much more than the revenue which we are otherwise getting,” he said.

According to Shah, the simplified processes will add to ease of doing business and reduce transaction costs.

“The focus right through the budget has been on simplification, on ensuring that the taxpayer gets better value for money, gets better services from us and has lesser interaction with us,” said Shah.

He also said that his department has now taken the move to withdraw all old pending prosecutions.

On the customs side, Shah said that deferment of payment of duty had been permitted. “These are sections which have been amended in the Customs Act which permits removal of goods without payment of duty, the rules and details will be finalised in the course of next few weeks, basically we want to club this along with a concept of an accredited client, a scheme which we already have.”

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