GST: States to suffer revenue loss, say Excise officials

Ambika Sharma

Tribune News Service

Solan, September 29

The decision of the GST Council to take full administrative control on service supply dealers having turnover below Rs 1.5 crore has become a point of contention for officials of the Excise and Taxation Department.

Officials said all states would sustain heavy losses after the lapse of the initial five years as the Central Government would compensate the states only for the first five years. The state governments would fail to enhance their tax collections and would be bereft of adequate funds for carrying out social welfare policies if this move was not reversed now.

Som Dutt Sharma, president and executive committee member, HP Excise and Taxation Officers Association, said the very premise of the Central government for taking control of service tax was faulty. The Central government has stated that it would be difficult to verify the credit flow as traders having turnover below Rs 1.5 crore comprised 93% of the service tax dealers in the state. Since the GST would operate on an online system, there was no scope of incorrect certification of any credit.

The association has given a memorandum to the state government and requested to plead the issue in the council’s meeting slated to take place tomorrow as the states had two-thirds majority in the GST 

Council.

At present, the state has a dealer base of 70,000 which would expand to 1,25,000 once the GST was introduced. Since such dealers deal in goods as well as service, they would have to deal with both the state and the Central government officials and this would tantamount to harassment, said the excise officials.

The officials said they had been dealing with service tax on various businesses and they were well-equipped to handle it.