Bihar, being a consumer state, is set to be a gainer once the destination-based Goods and Services Tax (GST) is implemented in the country, claimed 14th Finance Commission member M Govind Rao at a meeting of various stakeholders at Asian Development Research Institute (ADRI) here to discuss ‘GST: Implementation strategy and implications for Bihar’ on Wednesday.
“Bihar will need to prevent the domination of producing states and gear up its administration and information system if it wants to benefit from GST. The government should revisit tax exemption list and keep it to minimum,” Rao said, adding that tax structure should also be rationalized and there was no need to wait for GST implementation for that.
“The government needs to decide threshold, exemptions and rate structure, place of supply rules, deal with e-commerce, technology, training and taxpayer service and modalities to deal with present infirmities such as work contracts and area-based incentives,” Rao said.
The economist said implementation of any reform takes 10-20 years and added, “GST is important in the context of Make in India. Though it is not a game-changer, it is still an important arsenal in the fiscal armoury.”
Rao said nowhere in the world, the GST is flawless and outlined provision of 1% tax on interstate supply of goods as one of the defects of the present GST Bill awaiting Parliament’s approval.
Experts also agreed that no rate band should be mentioned in the GST Bill itself, as increasing the levy a few years down the line would require constitutional amendment, which will be tedious.
State commercial taxes minister Bijendra Prasad Yadav once again reiterated that Bihar is in favour of enforcement of GST and pitched for a robust system for its effective implementation.
Former deputy CM Sushil Kumar Modi, who once headed the empowered committee of state finance ministers on GST, said the Bill is stuck on three issues, including a cut of 1% demanded by manufacturing states. “However, these issues will be resolved very soon. But, what is worrying most people is the dual control and the traders’ community needs to be taken into confidence for the successful implementation of the new tax,” Modi said.