The modus operandi of the new Goods & Services Tax (GST) system that came into effect in India on July 1, 2017, was the subject of a meeting held in Wellington last week.
Hosted by the Indian High Commission in association with the Wellington Chapter of the India New Zealand Business Council (INZBC) and Accounts Icon Chartered Accountants at the Wellington Central Library on Thursday, July 20, 2017, the meeting created a platform for exchange of information and ideas for a closer public-private partnership between the two countries.
Among those who attended the meeting were Indian High Commission Head of Chancery Sandeep Sood, Government of India Finance Ministry Economic Affairs Joint Secretary Selva Kumar Singh, Joint Commissioner, Central Board of Customs and Excise Gaurav Masaldan, Assistant Commissioner (GST Policy Wing) Siddharth Jain and New Zealand Foreign Ministry Special Advisor, South and South-East Asia Division.
From New Zealand perspective, the topic of discussion was on the services relating to ‘zero-rating’ to supplies and services (legal, engineering and architectural), currently in Parliament.
Mr Jain said that there were similarities between the Indian and New Zealand systems.
“New Zealand has a very efficient system, established more than 30 years ago. The challenges faced by New Zealand are similar to those faced by us in India now. The Indian diaspora has a sound knowledge of the GST regime introduced in India,” he said.
Mr Singh said that he and his delegation “learnt a lot from the GST experience in New Zealand.”
Mr Masaldan thanked the Indian High Commission for organising the meeting, describing it as a ‘wonderful experience.”
INZBC was privileged and honoured to host such an esteemed delegation from India along with the High Commission of India. This was another great opportunity to engage with the Indian Diaspora and businesses in New Zealand.
GST origin in India
Contrary to popular belief that the GST regime was mooted by the current Government led by Prime Minister Narendra Modi, its origin dates to 2002, when a Task Force, headed by Vijay Kelkar, a prominent Indian economist, who is currently Chairman, Forum of Federations based in Ottawa (Canada) and India Development Foundation (Delhi) was established to consider a common code of indirect taxation.
The Kelkar Task Force recommended implementation of the Fiscal Responsibility and Budget Management (FRBM Act) in its Report submitted in 2003.
The Report had said that although the indirect tax policy in India has been steadily progressing in the direction of ‘Value Added Tax (VAT) principle since 1986, the existing system of taxation of goods and services suffered from many problems.
During his term as Finance Minister in the Congress-led United Progressive Alliance Government, Palaniyappan Chidambaram, in his 2006-2007 Budget, proposed a ‘National Level GST’ by April 1, 2010.
Since then, the proposal went through the ‘Empowered Committee’ chaired by the then West Bengal Finance Minister Dr Asim Dasgupta, the Federal Cabinet and its subcommittee and the States. A Model Roadmap was evolved and the current Government brought GST into force on July 1, 2017 following a midnight special session of Indian Parliament on June 30, 2017.
A Finance Ministry notification said that the GST replaced the multiple tax structures of Centre and State taxes as an ‘imperative measure in the emerging economic environment.’
“The Indian economy is getting more and more globalised. In recent times, a number of Free Trade Agreements (FTAs) have been signed, which will allow imports into India either as duty- free or at very low duties. Hence, there is a need to have a nation-wide simple and transparent system of taxation to enable the Indian industry to compete not only internationally, but also in the domestic market.”
Jay Changlani is the Head of the Wellington Chapter of the India New Zealand Business Council and Director, Accounts Icon Chartered Accountants based in Wellington.
Sandeep Sood (top left), Graeme Waters (Bottom right) and officials of the Indian government at the meeting held in Wellington on July 20.