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India Today - - OPINION -

hours over sched­uled time as wran­gles over ju­ris­dic­tion grew in­creas­ingly heated. None­the­less, the states have won some vic­to­ries: they re­tained con­trol over au­dit­ing deal­ers with a turnover of Rs 1.5 crore or less, and al­co­hol has been kept out of GST— even though in­dus­try rep­re­sen­ta­tives were keen to see it in­cluded. This was con­tentious be­cause states get nearly 30 per cent of their rev­enue from the al­co­hol and petroleum sec­tors. For now, cer­tain petroleum prod­ucts have been kept out of the GST as well, though the plan is to in­clude them at a later date. As fur­ther ne­go­ti­a­tions be­gin—the re­sult of which will de­ter­mine the suc­cess or fail­ure of GST—it is im­per­a­tive for In­dian pol­i­cy­mak­ers to re­mem­ber the vi­sion be­hind this over­haul. As Ad­hia says, “the first ob­jec­tive is to im­prove ease of do­ing busi­ness—a mul­ti­plic­ity of taxes makes it very dif­fi­cult for busi­nesses to op­er­ate. Also, in­ter-state move­ment of goods is very cum­ber­some. We should also have a tax­a­tion sys­tem in which it is not easy to evade taxes.”

The model bill, which has been open for pub­lic re­view, has wor­ried sev­eral stake­hold­ers. One is­sue is that it re­quires busi­nesses to regis­ter them­selves in every cir­cle or state in which they op­er­ate. This means that tele­com com­pa­nies, for ex­am­ple, may have to ap­ply for 36 reg­is­tra­tions. Sev­eral other com­pa­nies and sec­tors that have a pan-India pres­ence, such as banks, fi­nan­cial ser­vices and e-com­merce com­pa­nies, will also be af­fected if this pro­vi­sion re­mains. This would de­feat at one of the main rea­sons for ush­er­ing in a GST regime in the first place—im­prov­ing the ease of do­ing busi­ness in India. None­the­less, this pro­vi­sion has made it to the draft rules. Bipin Sapra of EY laments the com­ing change. “Today,” he says, “[the ser­vice in­dus­try] is in the best po­si­tion. There is one tax, and not too many com­pli­ances.”

The se­cond ma­jor ob­jec­tion is that while the GST bill al­lows for ‘in­put tax cred­its’, it also im­poses sig­nif­i­cant re­stric­tions. Sec­tors that have been Busi­nesses with a turnover of upto Rs 20 lakh kept out of GST am­bit. Thresh­old is Rs 10 lakh in North­east­ern states States to have ad­min­is­tra­tive con­trol over as­sessee with an an­nual turnover of less than Rs 1.5 crore Ad­min­is­tra­tion of ser­vices sec­tor re­mains with the Cen­tre to en­able smooth tran­si­tion All cesses to be sub­sumed into GST kept out of GST will not ben­e­fit—i.e. al­co­hol, five petroleum prod­ucts that will be added at a later stage, real es­tate and elec­tric­ity—and there will also be a sep­a­rate list of ex­emp­tions. (For ex­am­ple, if a telco finds it nec­es­sary to run its sig­nal tow­ers on backup gen­er­a­tors, they will not be able to claim tax al­ready paid on the fuel they con­sume.) Satya Pod­dar, a tax ex­pert

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