The earlier deadline of introducing GST by this fiscal could not be adhered to after the States and the Centre could not agree on its structure
The empowered committee of States today exuded confidence that the Goods and Services Tax (GST), proposed to replace most indirect taxes in the country, will be implemented from next fiscal, a new deadline after the earlier target was missed, reports PTI.
"That is our target and we will make all efforts to meet the target... We are confident," committee chairman Asim Dasgupta told reporters after meeting finance minister Pranab Mukherjee.
The earlier deadline of introducing GST by this fiscal could not be adhered to after the States and the Centre could not agree to its structure.
While States propose two main rates for goods and one rate for services, the Centre pitched for one rate for goods and services.
In the Budget, Mr Mukherjee had also said, "It will be my earnest endeavour to introduce GST along with DTC in April 2011."
The committee, comprising State finance ministers, would now meet on 21st May on the issue of GST.
"The next meeting of the empowered committee of state finance ministers has been convened on 21st May. As a preparation for that meeting, we needed to have some interaction with the Union finance minister, which we did today," Mr Dasgupta said.
He said the meeting next Friday will discuss relevant matters for implementation of GST.
When asked whether the meeting will take up the issue of Rs50,000 crore for States to meet losses due to switching over to GST as recommended by the 13th Finance Commission, he said all relevant issues will be discussed.
GST is expected to replace excise, service tax at the level of Centre and VAT and other local levies at the States’ end, besides cesses and surcharges.
DP World plans to position the Vallarpadam terminal in competition with other international ports like Colombo and Jebel Ali. However, the group will have to first face issues pertaining to the Indian cabotage policy before starting operations
DP World is proclaiming that it will attract cargo to India from other international ports like Colombo. However, the Vallarpadam terminal, being developed by DP World on a public-private-partnership (PPP) model, could face some initial hitches before kick-starting operations.
Dubai-based DP World, one of the largest marine terminal operators in the world with 49 terminals, is the private operator set to run the terminal at Vallarpadam at Kochi port in India. The port is being developed as a trans-shipment hub on a PPP model. The project involves a total investment of Rs2, 200 crore, with an investment of Rs1,000 crore by the Indian government and Rs1,200 crore by DP World.
The first phase of this terminal was earlier to be commissioned by June 2010. The new date is around July 2010. “The Vallarpadam terminal has been delayed a bit; we are talking of end-July 2010 from the earlier June 2010,” said Anil Singh, senior vice president & managing director (subcontinent), DP World Private Limited.
Mr Singh stated the reason for delay was the movement of equipment that is likely to be completed in this month and thus, the first phase is likely to be commenced by July 2010.
However, another major issue that the terminal could face is the Indian cabotage policy. DP World had requested the government certain changes in the policy in order to make the terminal competitive with international ports. Relaxation in the cabotage policy is expected to bring more trade to Vallarpadam and other major ports in India.
“The recommendation is with the shipping ministry right now. Till now, I don’t hear any new developments on that side,” said Dr Satish Balram Agnihotri, joint director general, department of shipping. Any relaxation in the cabotage policy is likely to receive strong opposition from Indian shipping companies. However, supporters of the Vallarpadam project argue that the relaxation would be a win-win step both for the port and the shipping companies.
Though DP World plans to commission the project in July 2010, operations at the terminal can start only once the necessary contracts are signed with the respective clients. However, the company has not signed any contracts at present, as it is awaiting relaxation in the cabotage policy.
“Yes, that is true (we would sign contracts once the decision on the cabotage policy is taken). We are waiting for the policy and then we can take a position on that (the contracts). We haven’t heard anything from the government,” said Mr Singh.
DP World officials claim that the new trans-shipment hub will help attract around a million tonnes of cargo to India. “This will help bring back India’s cargo from ports like Colombo and Jebel Ali,” said Mr Singh in a presentation made at a Confederation of Indian Industry (CII) conference on coastal shipping, a few months back.
The final draft, expected by June 15, may propose slapping 30% tax on any income above Rs10 lakh per annum
People with more than Rs10 lakh annual income may not get the tax relief originally proposed in the Direct Taxes Code (DTC), as the finance ministry is for tweaking slabs across the board to offset concessions elsewhere, reports PTI.
Under the first draft of DTC—which when implemented will replace the archaic Income Tax Act, 1961—income of Rs10 lakh to Rs25 lakh was to attract tax at the rate of 20%, but the final draft expected by June 15 may propose slapping 30% tax on any income above Rs10 lakh per annum, according to sources.
This is to make up for the possible concessions the ministry may extend in other areas like exempting long term savings from tax at the time of withdrawal and the way Minimum Alternate Tax (MAT) is calculated, sources said.
As such, the relief on highest tax slab would not be much, since under the present regime too, 30% tax is imposed on income of more than Rs8 lakh a year.
Sources said the ministry is reworking the August 2009 draft following feedback from stakeholders. Under this, the 10% tax proposed on income up to Rs10 lakh may now stand scaled down to Rs 5 lakh a year.
And income of Rs5 lakh-Rs10 lakh a year would attract 20% tax, although the first draft proposed slapping this rate on Rs10-25 lakh income.
However, the threshold level of income that is exempt from tax may be raised to Rs2 lakh from Rs1.6 lakh at present. The first draft had proposed retaining the threshold limit at Rs1.6 lakh.
Sources said the government has to generate tax revenue for meeting its expenses and it might yield to the "genuine" demand of MAT being imposed on book profits rather than on gross assets as suggested in the first draft.
"Gross assets also include the debt portion of a company and it is highly illogical to tax debt," said a source.
MAT is a tax imposed on profit making companies who do not fall under any tax because of various exemptions.
Further, the ministry might also agree to retain the current provision of following exempt-exempt-exempt (EEE) model for long term savings like provident fund and pension, instead of changing to exempt-exempt-tax (EET). The EET model implies that tax would be imposed on long-term savings at the time of withdrawal.
On tax exemptions on home loans, on which the first draft is completely silent, sources said that there might be no rebates in the second draft as well, since the individual tax exemption limit on savings like insurance and others is proposed to be hiked to Rs3 lakh from the current Rs1 lakh.
"This more than compensates" for doing away with tax rebates on the housing loans, the source said.
The final draft would be open for feedback from various stakeholders for 15 days, after which the ministry would put it up for the Cabinet's approval before taking it to Parliament.
Earlier, in the budget for 2010-11, the government had widened the tax slab so that tax of 30% falls on income above Rs8 lakh, 20% on Rs5-Rs8 lakh and 10% on Rs1.6 lakh-Rs5 lakh.