The Goods and Services Taxes (GST), if things go according to plan, is a mere three months away. It came as a boon in disguise that the State of Goa does not have much of manufacturing units as the GST is going to surely rev up the revenues of the consuming states as against manufacturing states, as is the case in the current tax regime.
The GST will now compact lots of taxes at the indirect level. The present GST structure is not new to the world and it has been introduced in at least 154 countries before India out of which 152 countries follows the single point taxation whereas Australia and Brazil follow the federal structure. India is now going to adopt an exceptional deviational mode of GST.
This means that within the federal structure, the reforms are in the category of (a) it will replace a lot many taxes and bring in one tax, which means that at a central level it will replace the service tax, counterveiling duties in customs, central excise duties etc which will now come under the ambit of GST. (b) In state taxes that is mainly Value Added Tax (VAT), entertainment tax, luxury tax, entry tax, purchase tax etc will now come under the perview of the GST. So Center and State will now be combining different taxes to come under one umbrella of GST.
How GST will operate:
GST will have three elements in it (a) State Goods and Services Tax (SGST); (b) Central Goods and Services Tax (CGST) and (c) Integrated Goods and Services Tax (IGST) which covers the trade between multiple states. When the goods are travelling interstate the state which is billing will collect the taxes and then forward it to Center and the Center will transfer that tax to the consuming state.
Earlier, the manufacturing states were charging the tax but the biggest change in the GST is that it is a consumption oriented tax. The destination state of any product consumed will be getting the advantage. This was brought about just to create revenue collection parity between the developed states and the economically ailing states.
One a question regarding whether Goa will be benefitted by the implementation of GST, the proprietor of SP Bhandare and Associates, Sandip Bhandare said, “For the first time the service tax will be shared in GST with the State unlike today when the service tax goes to the Center. The revenue was coming through allocation by the Center and not direct. This will surely be an additional again. However, there will be a loss in the revenue as Goa being a tourist State garners good amount of luxury tax and it will now become a part of the overall tax in GST. As far as goods are concerned the stock transfer model is being followed now. But with GST, Goa is surely going to gain. Yes, GST is a complex system of set offs of various taxes. At present it is easy to understand. The net revenue needs to be seen once GST is implemented. Overall the signs are that Goa will gain. In any case if there is a loss, there is a buffer by which the Central government will compensate the loss for the coming five years if need be.”
Similarly, Financial Consultant, Neetant S Shirodkar says, “Goa being a trourist destination collects lots of taxes through, VAT, services taxes, entertainment and luxury taxes etc. In the present regime the service tax goes to the Central government but since GST will come in to effect and Goa being a consuming State it will largely benefit the State as it will become a part of the SGST.”
However, there are many challenges before the State government too. Among financial experts and senior officials in the Indian Revenue Services posted in Goa, there were some skeptics.
Representatives from the Indian Revenue Services told Herald on condition of anonymity that: (a) The VAT Commissioner and senior level officers should be recruited on deputation from Indian Revenue Services (Customs and Central Excise) who have vast experience on collection of services, central excise taxes etc (b) Sustained training of staff is required with proper plan in order to sensitise the staff as the volume of revenue collection in terms of SGST will soar. (c) State government has very little experience of auditing the assessess. (d) Anti-evasion units on line of ACB of police is required to be formed in order to apprehend tax evaders. (e) Special data analysis cell must be created. (f) Marine patrolling of SGST officers is required as Goa is a coastal State. They further added that, “One VAT Commissioner for the state of Goa will not be sufficient as the volume of tax collection is expected to rise by almost double.”
