'GST will result in higher tax burden for consumers initially'

The Hindi Business Line By KV KURMANATH December 26

Tax practitioners say it’s not possible to roll out the new tax regime on April 1

Hyderabad, December 26:
The Goods and Services Tax (GST) is not something that consumers could care to wait for as tax practitioners foresee a higher tax burden initially.

“Tax rates may come down later. But in the initial two years, it would put additional burden on consumers,” MVK Murthy, National President of All-India Federation of Tax Practitioners (AIFTP), said.

The federation felt that implementation of GST from April 1, 2017, was not possible. “It might happen in September,” he said.

Stating that there won’t be much difference between the Value-Added Tax (VAT) that was in vogue and GST, he said both systems had multiple tax rates on goods. “Multiple tax rates could lead to disputes on classification of these goods. Also, they have left liquor, tobacco and petroleum, which attract higher tax rates, out of the purview of the GST,” he said.

The services component of GST could end up with higher tax rates for consumers as the initial rate proposed was higher than that charged now.

“The GST is being rolled out in 140 countries but only two countries have dual (Central and State level) GST. India is going to be the third country after Australia and Canada to have such a dual GST system,” he said. Murthy was in the city in connection with the South Zone conference of the federation.

The federation has over 7,000 members from different parts of the country. There are over 3.50 lakh tax practitioners in the country. “A Bill was introduced last year to regulate the tax practitioners,” he said.

He said the process of registration by dealers, traders and tax practitioners was on under the GST regime. The federation has been conducting awareness programmes for traders, dealers and tax practitioners to throw light on the new tax regime.

“As far as trade is concerned, there’s no change in VAT and GST regimes. States are going to lose the power to (levy) tax in the post-GST regime. States will have to depend on the GST Council’s nod on issues related to tax rates,” he said.

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