New Delhi, 17 December
In a first for the Indian tax- filing system, the country’s 6.5 million dealers might have to pay a nominal user charge when they file their returns on a unified portal once the unified Goods and Service Tax ( GST) comes into force.
This concept is being considered by Goods and Service Tax Network ( GSTN), the quasigovernment company that has been mandated to build and operationalise the GST Common Portal, to pay for the exceptionally heavy technology infrastructure involved in setting up an integrated network for India’s most ambitious indirect tax reform.
The central and state governments are yet to take a call on the issue or on whether the states will subsidise the cost. However, a Cabinet note ahead of the formation of GSTN had approved of a self- sustaining revenue model under which the company could charge both taxpayers and the tax authorities, that is, the states and the Central Board of Excise and Customs (CBEC).
“We don’t know whether state governments will agree to this suggestion and how taxpayers will react because at present people don’t pay for filing returns. But if we can charge a user fee upfront, that would be best,” said Navin Kumar, chairman, GSTN, in a joint interview with CEO Prakash Kumar.
The case for user charges gained momentum after a meeting between senior GSTN executives and leading multinational and Indian information technology service providers under the aegis of industry body Nasscom to invite applications for potential managed service providers (MSPs).
Most infotech companies expressed reservations about participating on account of the lack of clarity on their own revenue streams from a project that could stretch over five years. In the past year or so, infotech majors have stayed away from major e- governance projects because of uncertainties over payment.
“I know states are ready to pay for the portal, but what we want is to levy user charges upfront because it is the most efficient route and will give the MSP confidence and assurance that they will get their money quickly whereas the government takes time to release funds,” Navin Kumar said, adding that the portal would offer many other services beyond registration, filing and payments. The fee charged could be 20 or less.
The background work on setting up the portal has begun. Prakash Kumar, CEO, said a request for proposals ( RFP) was being designed and the contract would be finalised by next month. The company appointed PricewaterhouseCoopers the main consultants to the project last month to assess a pilot that was created by the CBEC and National Securities Depository Ltd ( NSDL) before GSTN was set up. The pilot has tested the concept by building applications that have enabled both registration and return filing.
While the government has indicated a deadline of April 1, 2016, for rolling out the project, GSTN has already started working closely with state authorities to authentic PAN information. Prakash Kumar said 70 per cent of this data was already “cleaned” and he hoped to finish the process by April.
“Meanwhile, we expect that by September- October our MSP will be able to roll out the registration so that we port and test data,” he added. The final testing of the systems is expected to begin from January 2016 through March.
However, the project is looking at ambitious timelines. The biggest concern of GSTN executives right now is a constitutional amendment bill to be passed and ratified by two thirds of the states, and for the states to pass their own GST laws. And before that, said Navin Kumar, basics like “ the GST Business Rules and Process, which includes the rate of tax, have to be frozen at the earliest for us to begin work on the network.” The Union finance ministry assured business chambers on Wednesday that the intent was not to have a high rate for the proposed national goods and services tax ( GST). These would be set after consulting them.
“The intent is to have a stable regime,” revenue secretary Shaktikanta Das said at a function organized by the Confederation of Indian Industry ( CII). He said the GST Council, headed by the Union finance minister, would finalise the rates after consulting business representatives. The Council will also have states representatives.
Earlier, a sub- panel of the Empowered Committee of State Finance Ministers had suggested a revenue- neutral rate of 12.77 per cent for a central GST and 13.99 per cent for state GST, totaling 26.5 per cent. This has fuelled fear of a high rate.
Combining excise duty with state- level value added tax ( VAT), the current combined rate for goods comes to about 24.5 per cent. However, many states have imposed a higher VAT than the agreed 12.5 per cent. Besides, GST will have input credit.
In services, only the Centre currently imposes tax at 12 per cent. After GST, both Centre and states will impose the tax. BS REPORTER FinMin assurance on GST rates
The central and state governments are yet to take a call on the issue or on whether the states will subsidize the cost.