TOWARDS THE GST

In one of the significant announcements in his budget speech, Finance Minister Pranab Mukherjee not only confirmed that the Goods and Services Tax (GST) will be introduced as scheduled on April 1, 2010, but also outlined broad contours of the new levy, as agreed to by the Empowered Committee of State Finance Ministers. As widely expected, India will adopt a dual structure, with the Centre legislating, levying and administering its own GST and the States having their own laws and rates for the tax. In effect, there will be two sets of GST, one for the goods and the other for the services, levied at two levels, the Centre and the State. These two would be mutually exclusive and operate throughout the value chain. Now that the government has come out clearly on the structure, attention should now turn to other essential features of the new tax on which a consensus is yet to emerge. A key challenge will be the determination of the rates to be applied. Two other major challenges relate to compensating the States for possible revenue loss and revamping the legal architecture. The 13th Finance Commission Chairman, Vijay Kelkar, has sought to allay the fears of the States and the Union Territories over possible revenue loss by promising suitable compensation at least in the early stages. Far more difficult, especially because so little preparatory work is in evidence, is the process of repealing Acts such as the Central Excise Act 1944 and the Finance Act 1994. Existing VAT laws will need to be amended or partially repealed. Amendments to the Constitution will be necessary, for instance, to enable the States to levy a service tax and the Centre to tax goods beyond the factory gate. A dual GST regime for goods and services will need to be backed up by a comprehensive set of rules for inter-State transactions. Even more than VAT, the GST will require strong political will for its implementation. Technology will need to be harnessed to a very large extent to make the GST work. The taxpayers, government officials, and the public at large will have to be educated about the various aspects of the levy. The GST will take the country closer to the ideal of a well functioning, integrated market, but a great deal of work needs to be done on a war footing if it is to be rolled out by the target date.
ANAND SHARMA TO HEAD BOARD OF TRADE The UPA Government has named Commerce and Industry Minister Anand Sharma as Chairman of the Board of Trade, a post last held by leading industrialist Kumar Mangalam Birla. The Board is the Government’s highest advisory body on export- and import-related issues.
The Commerce and Industry Minister will be the Chairman of the Board of Trade (BoT), the Directorate General of Foreign Trade (GDFT) said in a notification. The BoT advises the Government on policy measures for preparing and implementing both short- and long-term plans for increasing exports in the light of emerging national and international economic situations.
Among others, the Secretary in the Departments of Commerce and Revenue and Ministries of External Affairs and Textiles are members of the Board, which meets at least once every quarter. FIRST GREENFIELD MERCHANT AIRPORT BY 2011-12 India’s first greenfield airport to be set up as a joint venture with Changi Airports International (CAI) of Singapore will be ready by 2011-12. The project is set to come up as part of a Rs. 10,000-crore airport city in Durgapur.(West Bengal)CAI, through its subsidiary, Changi Airports India Pte Ltd, has already picked up a 26 per cent stake in Bengal Aerotropolis Projects Ltd (BAPL) which will implement the project, making it the first investment by CAI in an Indian company.