In Budget 2006-07, P. Chidambaram, Minister of Finance of the UPA II proposed implementation of Goods and Services Tax (GST) by April 1, 2010. The tax is yet to be rolled out.
A consumption based tax, the idea was to do away with the complications afflicting the current system of taxation. In a comprehensive GST regime all the transactions would be liable to a single unified tax.
The Empowered Committee of State Finance Ministers is yet to begin work on the design and format of the GST and is waiting to hear from the Central Government on the issues it has raised on the draft Constitution Bill for the implementation of the GST.
P. Chidambaram started the tradition of placing as part of the documents a statement on revenue foregone, known worldwide as tax expenditure statement.
This statement captures the departures from the normal tax regime. This exercise is a first attempt that will be fine tuned in the years to come.
It was also announced that the Departments of Income Tax and Customs and Central Excise would undergo Business Process Reengineering. Following which nationwide networks were put up to connect 745 income tax offices in 510 cities and 550 customs and central excise offices in 245 cities, creating national databases. National data centres, data warehousing facilities and disaster recovery sites are being set up.
It was announced that jurisdiction-free filing of returns, online tracking of status of accounts and refunds of income tax will be possible
Introduction of a risk management system and Electronic Data Interchange (EDI) in the Customs Department for reducing dwell time for cargo was announced. E-payments of customs and excise duties were to be made possible.
“I believe that the world has recognized the potential of India. It is now for us, the generation to which has been given the privilege of carrying the torch, to rediscover the greatness of this country and the potential of its people. The young people of India are building castles, it may appear that those castles are in the air. It is our duty to put the foundations on which the young can build their castles. Let us believe in our destiny, let us make our future,” said Mr. Chidambaram
