International BusinessMP may not switch to GST
The Madhya Pradesh government has said it would not adopt the goods and service tax (GST), made mandatory by the Centre for all states by 2010.
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“The government is not in a position to ask its traders and businessmen to switch to this complicated regime when they have yet to accustom to the value added tax system (VAT),” said a senior official in the finance department.
He said the traditional accounting system does not gel with the new tax system and there will be pro rata increase in prices if the GST was imposed. “The state will gain nothing from Centre in terms of service tax which is included in the GST.”
Justifying the decision, he said states like Madhya Pradesh faced difficulty in terms of managing huge forex cover, but received only pittance in lieu – a mere 30 per cent of what it garners as tax.
Moreover, the Madhya Pradesh government had introduced some new procedures to its tax system to arrest tax evasion cases. Towards this, the government cleared a Bill in 2007 and switched to the TDS system instead of VAT to check evasion, particularly in soyabean trading. The government has also introduced a modified "write-off" clause in VAT.