All the Finance Ministers of different states will be gathering on Tuesday 29th August 2016 to hammer out a consensus on the rate of tax. The start of a unified tax regime under GST will cause some initial losses to states, and the Centre has promised to compensate the loss.
The state of Andhra Pradesh will suffer a net loss of ₹ 4,800 crores when the new tax system will be enforced. The AP finance minister Yanamala Ramakrishnudu said that a unified tax regime would be convenient for all. He was inaugurating the first phase of the Commercial Taxes Complex of Visakhapatnam division.
The complex will be the first built for the Commercial Tax Division in the state. The government will also provide permanent buildings for the other departments. However, the commercial tax division provides a significant chunk of revenues for the state.
Meanwhile, the Industry is pitching for an 18% GST rate which will generate adequate tax revenues but at the same time will not precipitate any inflation. The Industry is also asking for a relaxation of the penal provisions which will be enforced on defaulters. The state chamber of commerce and industries felt that April 1, 2017, the deadline is too stiff since they would require more time to create the IT infrastructure.
CIII President Naushad Forbes said that a maximum rate of 18% is more than enough since the centre has assured to reimburse for the revenue loss to states in the coming five years. FICCI is also of the opinion that the ‘Standard Rate’ must be reasonable and must not be inflationary. The rate must be decided to ensure compliance and discourage tendency of evasion.
However, Forbes said that CIII is committed to April deadline and will do everything to make sure that the industry sticks to this time limit. He also said that working earnestly to complete the task on time will also ensure more clarity on provisions and the industry’s IT systems are in place in time.