GST spooks big taxpayers of country's first LTU in Bengaluru

High-net worth entities of country's first Large Taxpayer Unit (LTU) here are unnerved at the protocols that would follow proposed roll out of Goods and Services Tax (GST) next year even as they seek more facilities from government to improve the ease of doing business in India.

The LTU in the Karnataka capital was the first, among the five such facilities in the country, to be created in 2006 by the central government to act as a 'single window' facilitation centre for all large entities who have to pay various taxes like excise, corporate/income tax and service tax, under one roof.

The centralised unit here, which at present has 58 big taxpaying entities and corporate houses from Karnataka and Goa, collects about 20 per cent of indirect taxes (service and excise tax) and about 13 per cent of I-T in the said region, underlying the fact that despite having a very small number of taxpayers under its umbrella, the LTU captures a fairly big share in total revenue collection basket in the said region.

"Registering under the LTU is a boon for us as our 10 different offices located in various cities in the country are being assessed for all types of tax under one roof here which gives us a thrust to business operations and reduces a lot of litigation.

"But, when we talk about GST implementation from next year, there are unanswered questions in our mind, as then, would we have a similar kind of ease of doing business or we would have to register in different states separately? There is no clarity as of now," Vice-President (Indirect Taxes) Bosch Limited, G Elango told PTI.

Bosch Limited, according to data provided by the LTU, has paid a total of Rs 741 crore under various taxes in the current fiscal (updated till February, 2015).

Similar sentiments are echoed by another LTU assessee ABB India Limited.
"By registering under the LTU, our cost of doing business has come down. We get refunds in time and a lot of litigation has reduced. The GST looks to be a mystery for us. We just want that we get to have ease of doing business as promised by the new government when it took charge at the centre," Vice-President and Head (Indirect Taxes) at ABB, R C Pillai said.

The Goods and Services Tax (GST), an indirect tax regime, is to be rolled out from April 2016 that will subsume various levies like entry tax and octroi.

Local LTU head and Chief Commissioner Kameswari Subramanian said while she understands the dilemma and unease of these large taxpayers, it is premature to say that GST would play a spoilsport for the LTU system.

"We definitely need to get a clarity on these issues. GST could be a factor that new companies are sceptical to come to LTU in the last two years or so. We are doing a lot of seminars to make our taxpayers understand what is GST. But we can only tell them what is there in the public domain. Policy makers (government), I am sure, will keep their anxieties in mind," Subramanian told a group of visiting journalists.

Other corporate taxpayers who have been with the LTU here for a number of years say the current system of tax assessment needs some policy bolstering so that procedures are eased for companies who come here for simplification of tax procedures in their large business operations.

"We had to ship 40 boxes of original invoices to the LTU here last year for claiming one quarter of refunds. We have been with the LTU for over 2.5 years and the tax departments scrutinising us can probably do a selective random audit rather than a full-blown one.

"As large and old taxpayers, we would want to have some trust reposed in us by the tax authorities and the government," Director (Tax) at Dell India Private Limited Amit Gupta said.

Other business firms said duties levied under the Customs Act should be brought under the LTU scheme and manpower of the departments posted here should be enhanced.
Chief Commissioner Subramanian said she "agrees" with the grievances of the taxpayers and probably they can "look at" some of these issues and simplify procedures deployed to assess the taxpayers under LTUs.

"We need to treat these taxpayers slightly differently... may be, further simplify the procedures practised in LTU. I can assure the taxpayers here that the government will certainly think about all these issues to make LTUs more attractive," she said.
The LTUs have a dedicated staff and officers sitting in a separate office than from the usual Income Tax department and Service and Excise Tax department premises so that those taxpayers who have big businesses can get their things done quickly and in a hassle-free and quick environment.

Four other LTUs are operational at Chennai, Mumbai, Delhi and Kolkata and any assessee who has paid excise duty or service tax of Rs 5 crore or more and an advance tax of Rs 10 crore or more in the last fiscal is eligible to be included under it. Joining the LTU is totally voluntary.