The Confederation of Indian Industry (CII) made a strong push Sunday for speedy action to implement the proposed Goods and Service Tax (GST), an indirect tax measure expected to accelerate growth.
"GST is one of the most awaited reform measures on the table, and the industry hopes that political developments would not overshadow its progress," said Adi Godrej, chairman of Special Task Force on Reforms of CII.
Describing the work of the Empowered Committee of State Finance Ministers, Godrej said the panel has met three times in recent months and there have been positive developments on issues like compensation to states for the Central Sales Tax, exemption list and the Dispute Settlement Authority.
CII said the GST would bring many key benefits to the Indian economy, as well as to producers and consumers, by imparting efficiency to the indirect tax system.
"GST has the potential to add as much as 1.5 - 2.0 percentage points to GDP growth rate. Given the current slowdown of the Indian economy, such a measure is an imperative and is a ready stimulus," Godrej said.
According to CII, the proposed tax law would help in increasing tax base, curbing evasion and raising compliance for both indirect and direct taxes, thereby helping to raise additional revenues of almost 20 percent.
A constitutional amendment bill regarding the GST has been introduced in parliament and is being scrutinised by its Standing Committee on Finance.
Citing media reports about high combined central GST and state GST rates being under consideration, CII said: "We suggest that the combined tax rates should not exceed 18 percent and that exemptions to the GST coverage should be minimal."
The CII also said issues like threshold limit, compounding scheme for small traders, taxation of inter-state trade and others still need to be discussed by the Empowered Committee.