Even as anticipation builds up over Union Budget 2017, some of India’s legal experts are of the opinion that the transformational reform that the country needs is GST implementation.
While their opinions remain divided on when it will be ready to be rolled out, the sentiment they seem to share is, “The earlier, the better.”
Mr. Pravin H. Parekh, Senior Advocate, Supreme Court, believes that Budget 2017 will be a populist one as the Centre cannot afford to ignore the fact that several states are going to polls. As it would not be possible to restrict populist measures to these states and thereby risk coming under EC’s radar, the balanced approach would be to opt for a package of populist measures for the whole country and woo voters at the same time.
Referring to GST roll-out, he said, “From what I know, GST roll-out is unlikely to be implemented soon. There are many states that are refusing to co-operate – which is the key problem. States that are earning a lot of indirect taxes will put a big fight against it. To pass through with the implementation, the Government needs 75% votes in its favor. At present, that does not look possible. GST may be further delayed because each state looks after its own interests, not national interests. ”
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Talking about indirect taxes, Mr. N. Venkataraman said, “The much awaited GST should take place and implemented at the earliest. An assured implementation date will enable the medium and small scale enterprises to plan well ahead to suit the new dispensation. A clear road map showcasing stage-by-stage implementation needs to be evolved with total consensus on the Centre-State and its stake-holders. The assessee should not be sandwiched through the dual process control of the Centre and State on both substantive and procedural measures. A clearly thought out transition program needs to be in place to facilitate easy migration.”
He further said, “GST is a game-changer but let us not forget that it is also a political decision, one that can transform India. Presently, if you want to buy a computer or a smartphone, you have to pay all kinds of taxes on it – sales tax, entry tax, octroi, etc. Rationalisation at a single point – whereby there is only one tax to pay that too at a moderate price – benefits the consumer. This is what can bring a big smile to every Indian consumer. However, it is equally important for the government to ensure that the industry does not get a margin – all benefit should be directed towards the customers and that can bring the common man much happiness.”
According to Sanjeev Sachdeva, Senior Partner, Luthra & Luthra the implementation of GST is unlikely to take place soon. He says, “It is a major change, the administration and businesses are not ready for an immediate implementation. A realistic expectation would be to see it happen in October, not before.”
From an IPR perspective, India needs to incentivise more as China and Malaysia does, says Saurabh Bindal, Associate (Litigation and Alternative Dispute Resolution) at Link Legal India Law Services says.
According to Rajesh Vellakkat, Partner, Fox Mandal & Associates, a clarification pertaining to capital gains tax related to the assignment of multinational brands that have India registration is desirable.
“Every year, the Budget allocates deduction for R&D. In India, we want higher deduction as it is being done in China and Malaysia. If you look at Malaysia, they allocate 200% for R&D. Looking at China, they encourage innovation and give higher deductions for it. Boosting R&D and incentivising innovation is key to IPR. Coming to royalties in India, there is very little incentive for innovation because royalties come under the purview of service tax whereas copyrights enjoy exemption. The maximum royalty tax limit in India should be increased. “