Ms.Rashmi Verma, Special secretary, Revenue, Ministry of Finance, Government of India has assured the media and entertainment (M&E) industry that rolling out of Goods and Services Tax (GST) would be a game changer for the industry since it would mitigate their apprehensions about multiplicity of taxes, tax rates and lack of uniformity in the tax structure across the states.
Speaking at the CII Big Picture Summit in the capital today, Ms. Verma said “multiplicity of tax will go in one stroke. Entertainment, services and goods tax both at the Centre and states will be built into one making compliance hassle free”. However, she added that entertainment tax levied by local bodies like Panchayat, municipalities of various states etc. would remain the same since that is a major source of income to the local bodies. But the share of such taxes to the total tax collected would be insignificant. Close to 99 per cent of the taxes levied under the center and state dispensations would be merged with GST, she added.
Responding to a point made by a panelist that the proposed GST would complicate the process of levying taxes on M&E segments like advertisements, where there would be multiple claimants for tax proceeds depending on place of origin of advertisement and where it is displayed, etc. Ms. Verma said that such details were collated to decide the apportioning ratio of the proceeds of the tax among the Center and states. The consumer and industry need not have to worry about the apportioning of the tax proceeds since it is under the purview of Center and states. She also allayed the concerns of the industry that definitional clarity was lacking between goods and services and tangible and intangible goods by mentioning that under the GST regime, goods and services would be taxed uniformly to obviate the occurrence of such incongruities.
Referring to the 1 per cent additional tax which would be levied during the transitional period of GST for two years, she said that tax was mainly on the manufacturing sector and the services would be kept out of it. She also clarified that all industries would be eligible to take credit under GST to set off against other tax liabilities. “We are working on the transition roadmap so that the changeover hiccups will be minimal and if there are any concerns remaining the GST Council which will be set up after the constitutional amendment will look into it and take corrective actions,” she added.
Ms Verma assured the trade and industry would be consulted before any decisions were taken. In this regard, she mentioned that three draft processes have been put in the public domain and the fourth draft on Returns would be hosted in the internet today. She wanted trade and industry to give their concerns and suggestions to those drafts before finalization. A model legislation will be put in public domain by the 3rd week of November this year and regional workshops would be held at important cities to elicit the views of the industry associations at the apex and state levels. The dialogue process would be continuous and the GST Council to be constituted will take stock of the suggestions from time to time.
Ms Verma said that there would not be any concessions or incentives under the GST regime. However, she said that the states which are wanting to continue with the fiscal concessions for specified sectors could do so setting apart resources from their own kitty. She also said that there is no final decision being taken on GST rate; but hinted that slabs under GST would be minimal- one low and the other high and in between a standard slab- to keep the cascading effect to the minimal and easy to comply. Upon a query from a participant where media and entertainment would figure in the rate list, she said, “It is not in the sinful list I can assure you that”.
Mr V Krishnan, Member, Service Tax, Ministry of Finance, said that the three pillars of GST would be rate, technology and legislation. Regarding rate, he said that National Institute of Public Finance and Policy (NIPFP) was looking into the possible rate structure which could keep cascading effect to the minimal. On technology, Infosys was entrusted with the task of creating a world class portal to provide for an IT platform for the implementation of the GST. On legislation, he assured that industry would be consulted at every stage to bring to the fore their views, concerns and suggestions to be incorporated in the GST framework.
New Delhi
20th October 2015