Present high GST-slab of 18 per cent on service-sector is unreasonable for the honest tax-payers who bear an unreasonable tax-burden of total 48 per cent (30 per cent highest slab Income Tax and 18 per cent GST) in case those availing service do not pay GST. Such high net tax-burden tends for tax-evasion, an aspect for which drastic cut in Income tax was once done after recommendations of Raja Chelliah Committee.
GST on service-sector can and should be brought down to 12 per cent slab by abolishing concept of Input-Tax-Credit in service-sector. Moreover, the scope of GST-network can be widened by making all those availing and providing service with annual Rs 10 lakhs or more to be compulsorily registered for GST and paying GST.
Also it may be compulsory for all those availing service worth more than Rs 10 lakhs annually, to compulsory deposit GST at source at public-exchequers rather than routed through service-providers. Certificate of GST payment can then be provided to service-provider and also uploaded in the system in the manner TDS certificates are given in Income Tax Act. Service-providers then may deposit GST only on services where GST might not have been deposited by those availing service.
Madhu Agrawal
(The views expressed by the author in the article are his/her own.)
