COMMENTING on the panel discussion on Goods and Services Tax (GST), under its new Chairman, Mr Sushil Modi, Mr Ramu S. Deora, President of Federation of Indian Export Organisations (Fieo), pointed out that even though the Constitutional Amendment has been referred to a Standing Committee in Parliament, other issues such as provisions for states to levy cess during natural calamities, state autonomy in tax matters and concerns on powers of the proposed Dispute Settlement Authority still need to be ‘ironed out’.
Drawing attention to the issue of Central Sales Tax (CST, i.e. tax on inter-state movement of goods), which had been successively cut from 4 to 3 per cent in 2007-08 and to 2 per cent in 2008-09 after VAT’s introduction, the Fieo chief said the panel was likely to discuss the calculation of compensation to be given to the states in lieu of the government’s plans to do away with CST in stages.
He added that the manufacturing sector has steadily been losing its competitiveness since 2000 despite the export statistics indicating overall stellar performance.
While on the Revealed Comparative Advantage (RCA) index, a value of below 1 indicated relative disadvantage of a country in that segment, Mr Deora pointed out at the Reserve Bank’s annual report (August 2010) had said that the country’s competitiveness was consistently on the decline.
The RCAs of key sectors are displayed in the accompanying graph.
With regard to its request to the Empowered Committee in early August for ab-initio waiver of service tax for 17 export-related services, the Fieo chief expressed the hope that the suggestion would be incorporated into the GST, in order to boost export competitiveness, foreign exchange transactions of exporters and facilitate the implementation of an efficient credit offset mechanism through CGST/IGST/SGST.
Drawing attention to the issue of Central Sales Tax (CST, i.e. tax on inter-state movement of goods), which had been successively cut from 4 to 3 per cent in 2007-08 and to 2 per cent in 2008-09 after VAT’s introduction, the Fieo chief said the panel was likely to discuss the calculation of compensation to be given to the states in lieu of the government’s plans to do away with CST in stages.
He added that the manufacturing sector has steadily been losing its competitiveness since 2000 despite the export statistics indicating overall stellar performance.
While on the Revealed Comparative Advantage (RCA) index, a value of below 1 indicated relative disadvantage of a country in that segment, Mr Deora pointed out at the Reserve Bank’s annual report (August 2010) had said that the country’s competitiveness was consistently on the decline.
The RCAs of key sectors are displayed in the accompanying graph.
With regard to its request to the Empowered Committee in early August for ab-initio waiver of service tax for 17 export-related services, the Fieo chief expressed the hope that the suggestion would be incorporated into the GST, in order to boost export competitiveness, foreign exchange transactions of exporters and facilitate the implementation of an efficient credit offset mechanism through CGST/IGST/SGST.
Source : Exim News Service - Mumbai, Sept. 7
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