India’s corporate sector is expressing growing concerns over the complexity of multiple Goods and Services Tax (GST) assessments and audits across different states. This pressing issue, which significantly complicates compliance efforts for companies operating nationwide, calls for a streamlined approach to GST assessments.
Revenue Secretary Sanjay Malhotra emphasized the need for industry advocacy at the state level to address these concerns. He acknowledged that despite the ‘One Nation One Tax’ principle, the reality is far from unified, with companies facing up to 30 different state assessments. The Finance Ministry, recognizing the burden this places on businesses, is also committed to engaging with states to seek resolutions.
Malhotra’s remarks came during a post-Budget interactive session organized by the Confederation of Indian Industry (CII) in the Capital. He underscored the complexity of the issue, noting that reducing the number of assessments from 30 to one requires a concerted, collaborative effort with all stakeholders involved.
In response to a query from a top official at Cavinkare, who highlighted the inefficiencies of the current system, Malhotra admitted that an immediate solution is not feasible. Instead, he stressed the importance of continuous dialogue and incremental progress in addressing this multifaceted challenge.
Budget Priorities: Taxpayer Focus and Simplification
The Union Budget’s primary focus has been on the taxpayer, with proposals aimed at rationalizing and simplifying the tax system, enhancing competitiveness, and reducing compliance burdens. Malhotra highlighted the government’s commitment to a consultative and collaborative policy-making process, ensuring that taxpayer trust is maintained and valued.
Industry-Government Partnership in Tax Law Review
The government is keen on partnering with the industry for the comprehensive review of the Income Tax Act of 1961. Malhotra emphasized a collaborative approach, inviting industry input to ensure the review process benefits from diverse perspectives and expert insights. This collaborative spirit was reflected in CII Director-General Chandrajit Banerjee’s willingness to contribute to the consultation process, highlighting the Finance Minister’s commitment to reviewing the Income Tax Act within six months as a significant opportunity for constructive industry-government collaboration.
Fiscal Strategy and Investment
The fiscal glide path outlined in the Budget is expected to attract substantial investments, with the industry playing a crucial role. Banerjee expressed confidence in the positive impact of this strategy, emphasizing the value of ongoing industry-government dialogue to optimize outcomes.
Rationalizing Customs Tariffs
CII also proposed partnering with the government to build a joint consensus on rationalizing customs tariffs, aligning with the Budget’s proposals. This initiative aims to streamline tariff structures, fostering a more conducive environment for business operations and international trade.
Expanding the Tax Base
Addressing the question of increasing the tax base, Malhotra acknowledged the complexity of this goal. While India’s combined tax-GDP ratio stands at 18 percent, reflecting a moderate performance given the country’s development level, he anticipates further expansion of the tax base as the economy formalizes. Continued development and economic growth are expected to naturally broaden the tax base, contributing to the nation’s fiscal health.
In summary, transforming GST compliance in India necessitates a collaborative approach, engaging both industry and state governments. Through continuous dialogue, incremental improvements, and a shared commitment to simplifying the Tax framework, India can move closer to realizing the ‘One Nation One Tax’ vision. The proactive engagement of industry stakeholders and the government’s willingness to partner in this endeavor are crucial to achieving these goals and fostering a more efficient and equitable tax system.
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