Union Budget 2017: Finance Minister Arun Jaitley should provide greater clarity on the implementation of the Goods and Services Tax (GST), says Priyajit Ghosh, Partner, Indirect Tax at KPMG in India. According to Ghosh, post GST most of the services are likely to get expensive, while it will be a mixed bag for the common man on the goods front. In an interview with FE Online, Ghosh said that GST is very different from any other tax that people pay and would simplify the tax regime greatly.
“This Budget is going to be a landmark one because this is the last budget for all indirect taxes so to speak, because for all times to come it is going to be an aggregation of state and centre taxes. Two things that I would look at in the Budget is – firstly, convergence towards GST. The government needs to make sure that the current laws are made compatible towards GST,” Ghosh told FE Online. “The other part is to make sure that the transition happens smoothly. So what I do not want is my telephone bills going from say 15% tax to say some 20% tax. I don’t mind paying a little higher tax, provided that I get to pay a little lower tax on some of the other items. So I think, the rate convergence is going to be the other part,” he said, adding that, “yet another factor is to make sure that as a taxpayer, the industry is given a clear timeline to prepare for the transition. Which means that the government needs to announce when the changes will be tabled in the Parliament, when the final rules are going to out…also the rates need to be finalised.”
Asked whether GST will roll out in time for the new July deadline, Ghosh said, “The July 1 deadline is not completely impossible, we have the tendency to catch up at the last moment. It is a difficult task for the taxpayer as well as the tax administrator.”
And how will GST impact an individual’s budget? “GST is very different from any other indirect tax that we pay as of now. I would say that we don’t even know how much indirect tax we are paying. Just to simplify things, GST would help the taxpayer know what money he is putting on the table for the government. It is a simple tax for the taxpayer to understand,” he said.
According to Ghosh, “All the services are going to be expensive for sure. In fact the government is looking at three rate categories for services as well. What has been spoken of is 12%, 18% and 28%. Air travel, general services like telephone and non-essential services like spa are set to become more expensive once GST rolls in. On the goods part it will be a mixed bag. Most of the goods rates are expected to come down, but for textile and mobile phones, the rate of tax is set to increase. Interestingly, for the automobile sector, GST will largely be neutral. But the difference between a small and medium car, mostly explained by the difference in the tax rate, that’s going to get bridged. If you are planning to buy a small car, perhaps under the GST regime you can look at buying a medium car, if not a bigger car. Health and education services, fresh fruits and vegetables would not get taxed.”