Sushil Kumar Modi

Patna, Sept. 23: The European Union (EU) model of common tax system should be followed in India feels deputy chief minister Sushil Kumar Modi.

Modi, who heads the empowered committee of state finance ministers on goods and services tax (GST), said he was impressed with the EU model of common tax payment.

The GST, which is proposed to be implemented from April 2012, would subsume most of the indirect taxes like excise duty and services tax at the central-level and VAT on the state-level besides local levies.

“If EU, which is a conglomerate of 27 countries with as many Constitutions, can implement GST through a common market, why can it not be implemented in India, which has 28 states and one Constitution? We can also create a common market by removing the barriers (various tax structures) put up by the states. GST is certainly a step in that direction,” Modi said.

Modi, along with a 40-member delegation comprising several state finance ministers and officials, was on a 10-day tour to four EU nations — France, Spain, Belgium and Luxembourg — to study the common tax system and the implementation of GST in the EU.

The deputy chief minister, who was unanimously elected to head the empowered committee on GST in July this year, said: “We will apprise the Union finance minister Pranab Mukherjee and standing committee chairman Yashwant Sinha of our tour, experiences and suggestions. The 115th Constitution amendment bill was tabled in the Parliament in March and was later referred to the standing committee,” Modi said, while emphasising the need for a GST council where decisions would be taken unanimously on every aspect for the implementation of the indirect tax regime.

All the state finance ministers would be members of the proposed council, which would be incorporated in the amendment, he pointed out.

The deputy chief minister also spoke of the “dispute settlement authority” on the lines of Court of Justice of EU for redressal of the grievances of states or if any state does not comply with the unanimous decisions taken in the GST council.

“There are many states, which have expressed their reservations, saying that such authority might undermine their powers to regulate the tax system,” he added.

Sharing his experience of what Indians living in Europe think about India, Modi pointed out that they are concerned about the new scams, as it has severely dented the image of the country and it might also affect future global investments.