India set to launch far-reaching tax measures

There were deliberations a good deal in this regard before and now India is being perceived to change its age-old stances, the budding superpower has been found to shift from tax on production to a kind of consumption tax and consolidating all indirect taxes under the banner of the new goods and services tax (GST). It is to be noted that the 13th Finance Commission in its report submitted to President Pratibha Patil has also recommended fiscal prudence by the government.

Well, everything has been done under the auspices of Finance Minister Pranab Mukherjee, the grand patriarch of the ruling clique and he has already declared that he would make use of it in the imminent union budget in February for effecting fiscal discipline.

Let’s get more specific. On the word of Vijay Kelkar, Chairman of 13th Finance Commission, the commission was asked to put forward a new path for fiscal consolidation and as such he said, “We have recommended a new fiscal path for the next five years (2010-15).”

It has also come to the knowledge that the fiscal deficit, a reflection of government borrowings, is estimated to have an effect on 6.8 percent in 2009-10, up from 6.2 percent in the previous fiscal, mainly on account of the stimulus measures. The report deals with the issues of sharing tax revenue between centre and states, distribution of funds among states and support to local bodies.

What do you think then? The Finance Commission report assumes significance in view of the current reforms in indirect and direct taxes, which will have a bearing on the tax collections. As indicated by it, new goods and services tax (GST) is farsighted, wide-ranging and truly ‘flawless’.