THE SENIOR ANALYST
Jan 2014
It can be implemented only when Parliament
passes the Constitution Amendment Bill. The bill
has been pending in Parliament since March
2011. To pass the bill votes of at least two-thirds
of the members are required in its favour. In
addition, at least half of the state Assemblies will
have to pass the Bill. Parliament’s Standing
Committee on Finance recently submitted its
report on the Bill. It is improbable that it will be
passed in this election year.
The likely GST rate would be 14-16 %. GST would
help widening the coverage of tax base and
improve tax compliance, which will result in
higher generation of revenues, which shall in turn
lead to the possibility of lowered tax burden.
Likely Structure
Debacle of merger of Air India and Indian Airlines
with the staff of both the carriers up in arms has
not yet settled down and has been detrimental to
the progress of National Airline. In India, a merger
between two government agencies is too
challenging a task. Similarly, integrating the
revenue collection services of 28 odd states and
an extremely powerful Central Service into one
GST collection agent is indeed a challenge for a
country like India where the tax collection system
has always been in question due to lack of
governance and transparency.
It is highly likely that India is going to implement
the dual GST model, as opposed to a single
unified GST across the country. The decision
taken by India is largely influenced by its federal
structure and Canadian model of GST is the basis
for its proposal.
Accordingly, it has two components.
CGST includes: Central excise duty, service tax,
customs tax, surcharges.
SGST includes: Entertainment tax, Luxury tax,
VAT, Taxes on lottery.
Stumbling blocks for GST
Like any change model, GST has certain
roadblocks. Prominent among them are:
Administrative Hiccups:
Existing framework in Asia and worldwide
countries
Non-Asian GST rates
Asian GST rates
Australia
Brazil
Netherlands
Denmark
France
Germany
Italy
New Zealand
Russia
South Africa
Switzerland
UK
Bangladesh
China
Indonesia
Japan
Malaysia
Nepal
Pakistan
Philippines
Singapore
South Korea
Srilanka
Thailand
0
5
10
Asian GST rates
15
20
0
5
10
15
20
25
Non-Asian GST rates
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