FM Asks CBEC to Prepare for GST in Address to Chief Commissioners

GST Preparations – Quadrupling of Tax Payers to 50 lakhs Expected

15 June 2010 – The FM is personally monitoring the progress in the introduction of GST which is due for implementation in April 2011. The Finance Minister exhorted the Empowered Committee to push the GST regime by bringing about consensus among the states. A constitutional amendment will be required for this with a new list for single rate for all over India. The proposed Goods & Service Tax (GST) will be the most important reform in indirect tax administration in post Independent India, which will change the way business is conducted in India. The senior officers of the Department are holding series of interactions with all the stakeholders including the Trade and Industry so as to fine tune the design and concept of the proposed GST.

Introduction of GST will bring in great changes in the current architecture of Central Excise and Service tax. A few taxes currently levied by the States are also likely to be subsumed within the GST.

The transition from existing taxation regime to the proposed GST regime is going to be an administrative challenge for CBEC as the number of taxpayers is likely to increase from 13 lakhs to 50 lakhs. CBEC needs to organize several suitable training programmes with its training institute for capacity development of human resources to successfully manage this transition. He asked for the shifting of the administrative processes to the technology mode by adoption of appropriate technology and optimum utilization of its motivated work force CBEC will deliver the best services to taxpayers, provide conducive business environment and would successfully implement GST.

New Post for Service Tax Member in Board, Consultant on GST Appointed

In order to strengthen the Service Tax administration in the country and to facilitate a smooth transition to GST regime, the Ministry has created a post of Member (Service Tax) in the apex scale (Rs. 80,000) in CBEC. Besides this one consultant (a retired IC&CES Officer) has also been appointed to study the Best Global Practices for adoption in implementation of GST.

Nilekani Joins GST Band Wagon

The FM had announced the Technology Advisory Group for Unique Projects (TAGUP) under Chairmanship of Dr. Nandan Nilekani, Chairman UIDAI. He has already had three meetings with officers on GST related IT matters.

Parallel Sessions on GST, HR and Vision; New Group on Best Practices

CBEC structured the Conference by parallel sessions on preparation for GST implementation, HR issues, and Vision for the future. There was a presentation of Best Practices in important area by some field formations. The Finance Minister said that adoption of Best Practices would lead to standardization of departmental practices and procedures, which lead out disputes.

The Finance Minister noted that he had to forego Rs. 42,000 crores in cuts on indirect taxes as part of stimulus packages. The stimulus has produced results as seen from the growth in manufacturing sector, which in turn has helped subsequently through higher collection of central excise duty.

Indian economy grew by 7.4% in 2009-10. (The Chief Economic Advisor in a press conference said that the Index of Industrial production has reached 19.6% and growth is at 8.9% as fixed at target Rs. 3.13 lakh crores for 2010-11 compared to Rs. 2.47 lakh crores achieved in the earlier year. There is a step up of 21% on the previous year).

Emphasis on Checks – Vision Covers Revenue and Trade Facilitation

Vision of the Department encompasses revenue collection as well as trade facilitation and taxpayer services. Compliance is through Audit, Anti-Evasion and Anti-Smuggling efforts. The trust of your efforts should be in the realm of Audit and Anti-Evasion.

No Charge Sheet on Last Day of Retirement, Please

In the last year’s conference, the FM has emphasized the need for expediting vigilance matters. He asked for focused approach with proper adherence to prescribed time-lines to expedite vigilance matters. He said that he does not want that charge sheets filed against employees on the last day of retirement after they have put in more than 30 years of service to Government. Guilty must be punished but at the same time but those who have performed their duties and are victims of frivolous complaints should be adequately protected. The Department should focus on preventive vigilance and adopt a strategy for zero tolerance for corruption. CBEC has been asked to take proactive action to check litigation with its employees by setting up an internal mechanism in the form of a committee to decide a case on merit before moving for litigation in a higher court. A comprehensive proposal to streamline and strengthen the vigilance administration in line with best global practice must be prepared.

WCO Document on Customs in the 21st Century

In the realm of international Customs, the WCO has brought out a document on the role of Customs administration in the 21st century. This document talks about ten building blocks identified by the WCO which would form the new strategic directions for Customs. They include Globally Networked Customs leading to Customs to Customs Cooperation. Intelligence driven risk management, Customs-Trade partnership which would result in mutually beneficial outcomes, enabling technology and tools, and integrity.

Risk Management and Post Clearance Audit in Customs

On the Customs side Risk Management System has been introduced and CBEC intends to implement Post clearance Audit in a big way.

IT and Audit

The FM exhorted the Chief Commissioners to have a strong IT enabled Audit mechanism. An effective intelligence system to check the evasion of taxes but punish the wrong doers must be in place. Time is of essence in the functioning of investigation and intelligence agencies. Real time exchange of information amongst intelligence agencies will work as a force, he advised. The pace, magnitude and change of character of economic crimes requires the enforcement agencies to be constantly on their toes.

Land Ports Authority and Security

Customs has changed and would continue to change in the area of cross border trade, which at some time could pose threat to national security. The setting up of Land Ports Authority of India (LPAI) as a single agency responsible for coordinated functioning of various Government agencies and service providers at the Integrated Check Posts (ICPs) will strengthen the role of customs in matters of national security, the FM said.

Fake Currency Notes

The FM said that he has seen many reports from DRI, wherein on basis of intelligence received from Customs Overseas Intelligence Network (COIN) substantial amounts of fake Indian currency notes have been seized and this information has also been shared with other intelligence agencies. He asked for better coordination between COIN and Income Tax Overseas Units (ITOUs) on the part of DRI.

FM Laments 133th Position of India in World Ranking in Trade Facilitation

As per World Bank doing business 2010 Report in terms of ease of doing business India ranks 133, which is not a good sign. Singapore ranks 1st and China 89th. In India, it takes 17 days to export, in China 21 days and in Singapore 5 days. Similarly for starting a business it takes 30 days in India, 37 days in China, 3 days in Singapore.

IPR Enforcement

Enforcement of Intellectual Property Rights (IPR) enforcement with effective remedies against its infringement is important for promoting free and fair international trade and encouragement of innovation and investment. Grant of IPRs and their proper enforcement creates access to quality products for the consumers. The valuation of Intellectual Property Rights and transfer of embedded Intellectual Property Rights in an e-commerce regime is one of the biggest challenges to the Tax Authorities in cross border transactions.

India has emerged as a global Hub for research and development activities and a large number of multi-national enterprises are carrying out research in our country which is leading to generation of many patents in India. It is an appropriate time now to build capacity building in the area of valuation and enforcement of Intellectual Property Rights. (CBEC has already taken an initiative for organizing a study tour to the USA for 15 Customs officers to the US Patent and Trade Mark Office to study the best practices on IPR enforcement at borders through government and private sector partnership). Skill developments including development through Mid-Carrier Training Programmes in emerging areas of taxations, which have potential to reduce the tax base of the country.

HR Plan

There is an intense and long stretched litigation among officers in Group ‘B’ Appraiser cadres over seniority issues. This matter is likely to attain finality and the seniority list is likely to be finalized shortly. The FM asked the CBEC to ensure that the service litigation matter is attended to with priority. It should always look out for ways and means to avoid litigation with its own employees. Cadre restructuring of CBEC has been pending for quite some time, which has adversely affected not only the implementation of core areas of work in the department but also the morale of the employee.

The number of direct recruit IC&CES Officers has varied from zero in one year to more than 170 in another year, which reflects the missing elements in long term planning for CBEC’s human resource policy and cadre management. He asked the CBEC to prepare a long term human resource plan for its employees.

– ABS News Service–