The Hindu Business Line : Goods & service tax from 2010: Bhide

Tax commitment: Mr P.V. Bhide, Revenue Secretary, flanked by Mr K.N. Memani, Chairman, KNM Advisory Private Ltd, and Mr Ajay Singha, Executive Director, AMCHEM, at a meeting in the Capital on Wednesday. —

Our Bureau

New Delhi, April 9 The Government is committed to implementing a goods and service tax (GST) regime in the country from April 1, 2010 despite some uncertainty on issues like Central sales tax (CST) phaseout.

“We stand committed to implement GST from April 1, 2010. In a federal structure, there is a distinct role for the State Governments. We cannot bulldoze them. We have to recognise their sensitivities and take them along. That is the process we are on”, Mr P.V. Bhide, Revenue Secretary, told members of the American Chamber of Commerce in India (AMCHAM).

He was responding to concerns expressed by some members that no roadmap had been announced for GST implementation from April 1, 2010. Moreover, the Centre and the States were yet to come to agreement on the compensation issue for CST reduction. The existence of CST is seen as a tax that is incompatible to the current State-level VAT system.

Transfer pricing

On demands for consistent approach in transfer pricing assessments, especially in the direct tax side, Mr Bhide pointed out that the issues were complex and conceded that assessment officers may be changing their interpretations.

“We do intend to get into an interactive session in this area (transfer pricing) with trade representatives and our experts and see what can be done to get consistency in approach. But don’t ever think we take steps without bearing in mind how in line we are with international practice or out of line we might lean to be seen as by some others”, he said.

AMCHAM members wanted the Government to introduce advance pricing agreements (APA) at the earliest to ensure that there are no transfer pricing disputes. APAs are contracts between the taxpayer and the tax authority under which both the sides agree on transfer pricing policy for specified transactions over a specified period of time.

A CBDT official later indicated that the Government was not looking at APA introduction for now. The Central Board of Direct Taxes (CBDT) had sought industry views, including from NASSCOM and other bodies, on what sort of institutional mechanism prevailed in other countries for protecting such agreements.

It was pointed out that in the Indian context, a democracy with change in government every five years, an institutional mechanism was required to protect such agreements.

On the issue of recent increase in the number of “retrospective amendments” to overrule judicial pronouncements, Mr Bhide defended such amendments. “I concede that some of them appear to be harsh. But most of the retrospective amendments are procedural. “If they were very perverse, we won’t see increased compliance. It is also this increased compliance that has contributed to the revenue buoyancy in recent years”, he said.

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