January 9, 2019





Vijyender Sharma

SHIMLA----On the eve of GST Council meeting, the Confederation of All India Traders (CAIT) in a communication sent today to Union Finance Minister Shri Arun Jaitley has suggested to levy three stage GST instead of current multi-stage GST and the taxes subsumed in value of the goods will encourage consumers to obtain Bills which will augment the revenue.


The CAIT said that the efforts of the Government to simplify and rationalise the tax structure is appreciable but at the same time the dip in the revenue collection is a matter of concern. Therefore a mechanism is needed for easy collection of tax by the traders and also more revenue could be generated.


CAIT National President Mr. B.C.Bhartia & Secretary General Mr. Praveen Khandelwal in the communication said that general tendency among consumers is not to pay tax due to higher rate of taxes and thereby avoiding taking bills while purchasing goods, which forced sizeable number of transactions across Country to remain informal, causing loss of both direct and indirect tax revenue to the Govt and for this as a routine matter the trading community is blamed for evading taxes which is certainly not true. The non obtaining the Bill due to tax component by the consumers is the major reason for shortfall in the revenue.


In this context, Both Mr. Bhartia & Mr. Khandelwal suggested levy of GST only at three stages in the entire supply chain. First, levy of SGST & CGST on first sale of a commodity in a State. Secondly, IGST on inter-state transactions and thirdly SGST & CGST on goods produced or manufactured in a State at the annual turnover of more than Rs. 50 lakhs. After first transaction in a State , the rest of the supply chain should be relieved from levy of GST and the GST component should be merged in the price of the commodity so that when it reaches to the end consumer, the commodity becomes already tax paid.It is noteworthy to mention that subsequent transactions after first sale in a State add minimal value addition and as such the loss of revenue could only be upto 2% but since the GST is levied on first point, it will accrue additional revenue from 10% to 15%. Since the goods will be purchased in a State only after paying GST, therefore, the possibilities of tax evasion will not arise at all.


He further said that consumers knowingly well that the goods are already tax paid and they need not to pay money for taxes will obviously demand the Bill while purchasing goods and will not be certainly they will not be avoiding taking Bills..In this case the informal sale will be converted into formal sale which is bound to increase the revenue whereas more and more transactions will come under formal economy.


Such a step on the one hand will minimise the tax assesses where only few lakhs of entities will be required to be registered under GST instead of crores of entities thereby  will be easy for the Govt to govern and regulate tax system in a better manner and GST portal will be off loaded to a great extent. As far as revenue sharing between States is concerned and if at all need arises, the Finance Commission can draw a formula under which accrued revenue is shared between States.In any case both Govts at origin place and consuming place will get their due revenue and Central Govt will get revenue from both places. It will also relieved large number of traders from the clutches of tax system. When consumers will insist for Bills, a noteworthy number of transactions will come under formal system and direct tax collection of the Govt is bound to grow leaps and bounds-said Mr. Bhartia and Mr. Khandelwal.


He also suggested that traders should be given status of Tax collectors and certain rewards and schemes should be announced for them for collection of highest taxes. On the other hand some benefits in tax collection in form of tax rebate should also be given to tax collectors in order to encourage collection of more and more revenue.

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