Welcoming the imminent passage of the GST Bill, RC Bhargava, Chairman of Maruti Suzuki India has said that implementation of the Goods and Services Tax will be key to its success. “GST is welcome, but implementation measures need to be put place very swiftly,” Bhargava told CNBC-TV18. Talking about the expected elimination in tax evasion, Bhargava said, “Tax evasion should reduce with implementation of GST. At least it should be minimal. However, the ability to control evasion will depend on the IT system and the way it is implemented.” “Our people are very adept at trying to find loopholes and ways of hacking into the system and changing things,” he added. Bhargava stressed on the need for an effective enforcement machinery.
With reference to whether taxes on automobiles will come down, Bhargava said, “I am not sure if taxes on automobiles will come down by 4-5%. The system of GST, as I understand it, is going to be on the final consumer price at the showroom of the dealer. Today excise duties are charged at the ex-factory price. So the base on which the tax is levied will change. But, whether that leads to a lowering of tax or not will only be known once we know the details of how the taxes will be calculated.”
Finance minister Arun Jaitley, at a meeting with his state counterparts last week, promised to keep the incidence of tax low while safeguarding the revenue of the states. The Congress, which dropped its demand for an 18% GST rate cap in the Constitution, is demanding what they call “ring-fencing” of the rate in the GST Acts (Centre, state and interstate GST Acts). Sources said the government is considering this suggestion favourably. As the Congress with 60 members in the 244-member Upper House is set to support the Bill, its passage now looks almost certain. GST, when implemented is expecting to provide a big booster shot to the economy’s GDP.