GST to tackle Post-Brexit uncertainty: Experts

Abhishek A. Rastogi, director, tax and regulatory service, PwC, Rupa Naik, project-director, World Trade Center Mumbai and Firoze Andhyarujina, senior advocate, Supreme Court.

Even as global markets plunged following Britain’s exit from the European Union, the question that kept the financial capital of India busy was how it will impact India.

At a workshop in the city on Monday, experts felt that passing the Good and Service Tax (GST) in the Rajya Sabha will be the best way to tackle the post Brexit uncertainty in India.

“The GST network is ready; the IT infrastructure to support the regime is in place. There is a likelihood that the GST Bill can also be passed by at least 50 per cent of the state governments. However, the real test would be the passage of the bill in the Rajya Sabha,” said Abhishek A. Rastogi, director, Tax & Regulatory Services, PricewaterhouseCoopers (PwC) at the Make in India Fourth in Series Workshop on ‘Implications of GST — Industry Perspective’ organised jointly by All India Association of Industries and World Trade Centre Mumbai, supported by IDFC.

“I expect the Congress to oppose GST, other parties will support. But will the Rajya Sabha proceedings go on time without disruptions I cannot predict that,” Mr Rastogi said raising a concern.

Speaking about the pros and cons of the GST regime, he stated that the government has included various provisions to make the GST regime taxpayer friendly (reduced litigation, transfer of unutilised input tax credits). “The Integrated Goods and Services Tax (IGST) is the most innovative and appropriate model for a federal country like India. Although valuation of barter transactions and definition of some transactions are some areas of concerns,” he pointed out. Speaking on this occasion, Firoze B. Andhyarujina, senior advocate, Supreme Court, that GST is a time supply tax in contrast to excise. He said that GST would promote India’s economic growth and offset any adverse impact on the economy from Brexit. “The exit of Britain from European Union would have a far-reaching impact on global economy, especially on international trade. The Indian government must use this development to introduce GST and support economic growth,” said Mr Andhyarujina.

Mr Andhyarujina raised hope that the GST regime would reduce the number of litigation between the industry and tax authorities. He informed that while the government’s tax collection doubled in the last five years, the tax disputes have risen over 600 per cent during the same period. “The government has to pay Rs 1 lakh crore in FY16,” the senior advocated pointed out.

He stated that there were some onerous provisions in the GST bill. “It is the onus of the buyer to conform whether the seller has paid the tax on inputs.” He further added that the benefits given to employees were not eligible for claiming input tax credit. The issue of dual control by central and state governments, the determination of revenue neutral rate were some the other contentious issues that needed to be ironed out.