To curb tax avoidance, GST rates may not be disclosed soon

The rates under the Goods and Services Tax (GST) regime are unlikely to be out before April-end as the government wants to avoid any tax evasion attempt by companies.

India’s corporate entities will be tracking the developments in the Budget Session, which resumed on Thursday, as the GST Bill will be taken up in Parliament for passage before it can be implemented from July 1.

Once the GST regime comes into effect, tax rates for 80,000 items will be revised and brought under the 5 percent, 12 percent, 18 percent and 28 percent bracket. Here, not only will the rate of excise and value-added tax be revised, but the rates will be different depending on which bracket a company operates in.

Companies have already engaged tax consultants to understand how their tax liabilities will change after July 1 when GST is proposed to be implemented.

M S Mani, Senior Director, Deloitte Haskins and Sells said that they are doing a GST Impact Assessment for companies looking at different tax scenarios. “If rates are revealed earlier, some companies may indulge in tax avoidance activities,” he added.

With no clarity on what the final rates would be, the industry is unable to plan on their provisions for future taxes that will be applicable beginning April 1. The tax changes will be a mammoth exercise for the authorities since for every single item the comprehensive rate will be given for each of the 29 states.

It is also expected that there would also be disputes in areas where companies would either be categorised in a different segment or would want a lower rate of taxation. For instance, in case of chocolates/toffees, there are categories like candy, sugar-coated hard candy, toffee, chocolate-coated biscuit, and regular chocolate.

So, the fear is that if the tax rates are put out in the public domain after the March 15 meeting of the GST Council, manufacturing companies may either stop production or over produce in order to avoid paying a heavy taxation later. This could, in turn, impact the country’s gross domestic product.

Mani said that they have been doing simulations on the different tax structures so that companies are adequately prepared for all the situations that they may be exposed to from July 1.

He added that smaller companies will also gear up on technology, especially since compliance will completely be driven by technology. Even payments will be made digital, so that all such transactions can be tracked.

Souce : Money Control

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s