Sales Tax Review

December  2007

Roving Eye

1. Roadmap for New Gst is drawn – Requires filing only one return to tax authorities

As reported in Business Standard dated 30-11-2007, in a move that will significantly reduce paper work for producers of goods and services, the draft recommendations submitted by the all States joint working group on goods and service tax (GST) have said one document will have to be filed.

2. Businesses and traders currently files separate returns on State Sales Tax, Central Sales Tax, Central Excise and Service Tax.

3. The draft recommendations were accepted by the Empowered Committee of State Finance Ministers, which will be submitted to the Finance Ministry next month.

4. The GST structure will be finalized by December 2008 and the rates will also be finalized around that time. Once implemented from April 1, 2010, India will essentially have three major taxes – (1) tax on personal and corporate income, (2) GST and (3) property taxes. The recommendations have modelled the new GST administration on the Canadian system. Under this system, there will be a Central GST authority and a State GST authority. Taxpayers will have to file the same GST return to both the authorities. For administrative convenience, the State authority will collect both Central and State GST on all goods and pass on the Centre’s share. Similarly, the Central authority will collect GST on all services (except primary public health and primary public education) and pass on the State’s share.

5. Taxpayers will be issued a unique Permanent Account Number (PAN). Obviously, the present TIN number will stand cancelled.

6. GST is essentially a value added tax that requires producers to pay tax only on the value they add to the goods or service in place of current system in which Central and State imposts cascade on the price of the final product. However, exports will be zero-rated and will be relived of all embedded taxes and levies at both the Central and State levels.

7. State taxes to be merged under GST are value added tax or sales tax, entertainment tax, luxury tax, octroi, entry tax, taxes on lotteries, betting, gambling and purchase tax.

8. State entertainment tax will be abolished and it will come under services under GST.

9. Currently, half-a-dozen states levy purchase tax on buyers instead of sellers, which cannot be claim as input credit. This tax will be abolished within a time frame and the tax will be covered under GST and will be opened to input credit.

2. Timely justice at Re. 1/- per head every month

The following piece of information is based on the Times of India Research Report dated 30-11-2007.

2. The Govt. has simply not focused on how to pull the judiciary out of the mess. Each passing year, Parliament and State Assemblies pass more and more laws, yet no one in the Govt. appears to give thought to the obvious – that the number of judges should be increased to cope with increased number of litigants and that retraining of judges in new laws should be mandatory.
    

3. Chief Justice K.G. Balakrishnan has actually worked out a figure of additional judges that would be required to clear the judicial backlog. According to him, if 1,539 new judges were added to the existing 792, all pending cases in High Courts would be cleared in a year. And if they are to be cleared in two years, 770 additional High Court judges would be sufficient.
    

4. TOI would, however, like the salaries to be much higher to ensure an efficient and corruption free judiciary. If worked out a model in which judges would get a respectable salary and it hiked the number of judges to the level required to clear the backlog within two years, and found the additional cost would be Rs. 1,426/- crore. This works out to Re. 1/- per Indian per month – a small price to ensure quality and timely justice. In addition, the Government has to invest more in the infrastructure of Courts.

TIMES VIEW

Figures in bold indicate the proposal; the salary figures for each level are rough averages.

* Actual No. of judges, excluding vacancies.

5. The TOI research team has done a wonderful job as above. If you feel quite impressed about it, please raise your voice in Government quarters so that we get an efficient judicial system. Hence, we must act now and without any loss of time.