Mangaluru: After the World Bank termed GST as one of the most complex with the second highest tax rate in the world among a sample of 115 countries which have a similar indirect tax system, the Dakshina Kannada Congress Committee rued (DKCC) over the cascading tax effect and high compliance costs affecting common man in general and businesses in particular.
Addressing the media, the DK Congress Publicity Campaign President Dhananjay Adpangaya said the lacunae in GST implementation might affect the economic activity and ultimately the benefits of GST are likely to outweigh its costs in the long run.
Lashing out at the present tax regime which according to him has around 13 tax slabs taking into account different cess rates applicable for products, Adpangaya said the Indian multiple tax slabs matched with that of Pakistan, Ghana and two other countries.
Highlighting the case of cement, he said the product carries 28 percent GST and to make matters worse taxes are accounted for loading/unloading and transport thereby resulting in price increase at the delivery point.
In a major setback to the NDA Government’s nine months’ old Goods and Services Tax (GST), the World Bank recently said, “High compliance costs are also arising because the prevalence of multiple tax rates implies a need to classify inputs and outputs based on the applicable tax rate. Along with the need to apply the correct rate, firms are required to match invoices between their outputs and inputs to be eligible for full input tax credit, which increases compliance costs further”, it added.
Placing the contents of the WB report, Adpangaya said only exporters and those functioning in SEZs got refunds. Most CAs and GST practitioners are not well versed with the GST tax regime even to this day and are unable to handle the volume of transactions, thereby making the life difficult for traders and manufacturers.
Locking-up of working capital due to slow tax refunding, high compliance costs are only adding to the existing misery, he rued being a businessman himself. Unfortunately, petroleum and associated products carry a huge tax and are not in GST ambit, he stated hinting at the complexities.
“Key to success is a policy design that minimises compliance burden, for example by minimising the number of different rates and limiting exemptions, with simple laws and procedures”, Adpangaya said echoing sentiments of Congress Chief Rahul Gandhi.
“An appropriately structured and resourced administration, compliance strategies based on a balanced mix of education and assistance programmes and risk-based audit programmes are needed”, a recent WB report had indicated.
Ibrahim Kodijal, Sadashiva Shetty, Dennis D’Silva, Mohammed, Dheeraj and Nazeer Bajal were among those present.
