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Jaswant promises a green-channel tax system

By Our Special Correspondent

New Delhi May 6. Parliament today completed the budget process for the year with the Rajya Sabha returning the Appropriation and the Finance Bills, 2003, after the Finance Minister, Jaswant Singh, assured the House of a movement towards a simplified "green channel" taxation structure.

The Finance bill, which gives effect to taxation proposals in the budget and the Appropriation Bill to meet Government expenditure for various Ministries in the budget was passed by Lok Sabha last week.

Replying to an eight-hour long discussion on the two bills spreading over two days, Mr. Singh said that the Government's endeavour was to simplify the tax procedure, to reduce the "adversarial" role between the tax assessee and the tax department. "I want to work on a tax regime based on trust and the green channel system in all areas of taxation including customs and excise," he said.

Admitting to the complexities of notifications as pointed out by some Opposition members, Mr. Singh said this was why the Government was trying to reduce the interface with the tax-payers through computerisation and slowly move away from powers of discretion.

Responding to repeated concerns of the members, Mr. Singh made it clear that the value added tax (VAT) would be introduced in the country only after all States completed preparations for its implementation. Of the 16 States that had to legislate on VAT, only eight had done it and even those were not uniform.

The Minister said that with VAT being an important step in tax reforms, he did not want it to become a vexed tax system with improper implementation. The central sales tax (CST) and providing compensation to States for any revenue-loss were linked to the implementation of VAT and it would be taken up at an appropriate time.

According to him, the service tax as yet was an enabling provision for the Centre and State to collect tax. After the Service Tax Bill — which was before the Lok Sabha — was considered, the percentage of taxes to be shared between the Centre and the States would be decided. He, however, added that in some services, the entire service would be the share of the States.

Regarding the concessions given on refined edible oil and vanaspati in packed containers, Mr. Singh announced that it had already resulted in a reduction in ex-factory prices. On the apprehensions about tax on business entity in the textile sector, he clarified that it would not be based on fiscal location so long as looms belonged to different entity clearances. The service tax on education would not be applicable to just any formal education but only to tutorials and multiple academies like preparation for IAS etc.

Responding to a demand made by the AIADMK member, P.G. Narayanan, for incentives for fiscal reforms in Tamil Nadu, Mr. Singh said the Government had cleared open market borrowing of Rs. 500 crores for VRS in state-run public sector units.

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