The Hindu : New Delhi News : India be made a free trade zone: CAIT

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India be made a free trade zone: CAIT

Staff Reporter

Traders hail decision to reduce Central Sales Tax

‘This would pave the way for smooth transition to GST taxation system’
‘It should also be ensured that no attempt is made to increase VAT rate’

NEW DELHI: The Confederation of All India Traders (CAIT) has hailed the announcement of the Central Government to reduce Central Sales Tax from 3 per cent to 2 per cent from Sunday stating that this would pave the way for smooth transition to Goods and Services Tax (GST) taxation system that is likely to be introduced from April 1, 2010. The CAIT has stated that with GST introduction, the Government should also declare India as a ``Free Trade Zone” by removing trade barriers like road permit and entry form that being used in inter-State trade and should strive to introduce uniform taxation system throughout the country in terms of taxes and laws as well.

Secretary general of CAIT Praveen Khandelwal said on Saturday that it should also be ensured that no attempt is made by the State Governments to increase VAT rate in lieu of reduction in CST. Complimenting Union Finance Minister P. Chidambaram and Chairman of Empowered Committee of State Finance Ministers Asim Das Gupta reducing CST, he urged that directions may be issued to tax authorities not to impose any penal action against those traders who have charged CST at the rate of 2 per cent in the past two months in furtherance of the specific announcement of Finance Minister made in the Budget speech and the error if any should be condoned.

The CAIT has also demanded that in the wake of introduction of GST from April 2010, a Joint Working Group of the officials and stake holders should be constituted to look into issues pertaining to this form of taxation. The Confederation had also demanded that traders being the largest stakeholder of GST should be taken into confidence prior to finalisation of GST roadmap and only after obtaining inputs and suggestions from trade and industry, the white paper on GST should be released.

It has also demanded that the proposed GST should have simplest form of taxation procedures so as to avoid unnecessary hardships and harassment caused to traders.

The incidence of total tax on goods and commodities should be less in order to gain revenue if the design of GST is able to promote better compliance among stakeholders.

Recalling the past experiences, the CAIT has also suggested that there be a mechanism in GST to ensure that benefit of tax reduction is passed on to the consumers by big companies and the big manufacturers should be under obligation to divulge their pre and post GST manufacturing price to respective State Governments. Though taxes levied on goods and services will be amalgamated in GST but status of other taxes levied by the local bodies on traders should also be made clear and rationalised in all States, it said.

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