The Centre and state governments are considering a single authority to administer the proposed Goods and Services Tax (GST) to avoid traders and businesses from being subjected to control at both central and state levels with regard to the same transaction.
The proposed authority may be modelled on the Canada Revenue Agency and the Australian Taxation Office that administer GST in their countries.
To ease compliance burden for taxpayers, the Centre also wants the GST administration to be entirely based on self-assessment by taxpayers without state scrutiny. It reckons that businesses at successive points in a product's entire value chain claiming input tax credit will ensue that all businesses would file the correct return and pay due taxes.
These plans are part of a indirect tax administration rejig at both the levels necessary to implement GST that would replace central taxes -- excise and customs taxes (except basic customs duty) and service tax -- and state and local levies, including the Value Added Tax (VAT).
Along with constitutional and statutory changes to give force to GST, the governments also need to put in place a suitable administrative machinery to implement it.
“The proposed single authority will have officers from both the union and state governments but their salaries would be paid by the authority. If officers draw salaries from different governments, they would serve the conflicting interests of respective governments, not to the cause of a single market that GST seeks to achieve,” said a person privy to the discussions between the Centre and states. At present, indirect taxes at the central level is administered by the Central Board of Excise and Customs (CBEC).
The Empowered Committee (EC) of State Finance Ministers deliberating on the design of GST will review the draft Constitution 115th Amendment Bill and discuss a host of issues at a two day meeting in Shillong starting November 18.
Sources said that EC chairman and Jammu & Kashmir finance minister Abdul Rahim Rather has asked state governments to give their written comments on the Bill at Monday's meeting.
The Centre's logic for making GST entirely based on self assessment is that if a supplier of raw materials does not file his GST return, his client will not be able to get credit for the amount of tax that got built into the cost of the raw material or service he purchased, while paying taxes on the final product. In order to