Execution of 3-tier system in GST to be opposed: CAIT

Advocating the implementation of a unified GST system, as against the government’s 2009 proposal in the first discussion paper on the subject for a three-tier system, officials of the Confederation of All India Traders (CAIT) on Friday said that the association would oppose the proposal if implemented as it would hamper the growth of non-corporate small businesses.

Speaking at a round table meeting organised by the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), CAIT General Secretary Praveen Khandelwal said, “The proposal made in 2009 calls for a three-tier system, namely, Centre, state and inter-state GST with overall rate of 16 per cent. We have told Union Minister for Finance Arun Jaitley that a unified system with essential goods exempt from GST would help small businesses.”

Khandelwal said that the tax initiative should be implemented by 2017, but also said it is possible for it to be announced earlier. “We are opposed to the proposal and will continue to voice our opinion against it if it is implemented,” he added.

He also called for a separate viable finance mechanism for the non-corporate sector with rules that can easily be complied with.

“This sector contributes about 45 per cent of GDP, but banks continue to prefer disbursing loans to the corporate sector. Banks look only at our balance sheets, whereas, we feel that businesses should be assessed based on their capacity to pay. Real change can come about only when a separate system is implemented for small scale businesses to obtain financing,” he said.

Khandelwal went on to say that with the increase in flow of FDI (foreign direct investment) into the non-corporate sector, the government should promote it by applying “reasonable” regulations.

CAIT has constituted an ‘Action Committee for Formal Finance for Non-Corporate Small Businesses’ comprising organisations from the sector across India to receive suggestions and inputs on matters like obtaining finances. Khandelwal said the inputs collected would be recorded and presented to the Prime Minister.