India Inc on Tuesday pressed for keeping GST at a maximum 18 per cent while e-commerce firms sought to be kept out of the new regime, as state finance ministers began consultations on deciding the rate for the unified nation-wide indirect tax.

They also demanded relaxation in penal provisions while admitting that April 1, 2017, deadline will be tough as they need sufficient time to put in place the IT infrastructure.

"A lot will depend on the timing of rules and notifications. (About April 2017), it looks difficult," Ficci said.

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In its first meeting after Parliament cleared the landmark Goods and Services Tax (GST) Bill earlier this month, the empowered committee of state finance ministers, headed by West Bengal Finance Minister Amit Mitra, discussed the issue with industry bodies, traders and chartered accountants.

"The committee is taking (feedback) in an open and transparent manner from the businesses of India, whether they are big, medium or small. Many points were made looking at GST from the other side -- those who would be paying taxes -- as against the government which would be collecting taxes," Mitra said after the meeting.

According to India Inc, a reasonable rate will generate adequate tax buoyancy without fuelling inflation.

The constitutional amendment mandates that at least half of the 29 states and two Union Territories should ratify the Bill for its rollout. So far, 13 states have approved the legislation.

Once implemented, the national tax will subsume indirect ones like excise duty, service tax and VAT.

At today's meeting, online retailers submitted that they only provide a 'platform' to vendors and customers and do not make money out of the sales. So, companies like Flipkart, Amazon India and Snapdeal are only 'service providers' to the vendors and are liable to pay GST only on service income.

CII President Naushad Forbes said, "We believe a maximum rate of 18 per cent as the standard rate will be revenue neutral and ensure adequate tax buoyancy. Also, the Centre has agreed to a full 5-year compensation for revenue loss to states. So, 18 per cent rate will be more than adequate."

Ficci on its part suggested that the standard rate should be "reasonable" and be such that it checks inflation and tendency to evasion and ensures compliance.

"Goods fully exempted from the levy of excise duty and VAT by all the states should be categorised as exempted goods in the GST regime as well," it suggested.

As for preparedness for the GST rollout, Forbes said CII is committed to April 1 deadline and will do "everything we can to ensure we stick to the deadline".

"If we work towards that deadline and have clarity on some of the provisions as early as possible, we can ensure our own IT systems are put in place quickly so that we can go live as early as possible," Forbes said.

Assocham sought relaxations from penal and prosecution provisions during the first two years of GST launch except in the case of tax fraud or non-deposit of collected taxes.

It wanted that the Centre and states should set up a mechanism to advise traders on legal provisions arising out of the implementation.

Mitra called upon the industry to give suggestions on the quantum of penalty, saying the empowered committee and the GST Council will look at the provision of arrest and prosecutions.

The industry chambers also demanded single centralised registration of suppliers of services that operate in different states in place of multiple state-wise registrations for specific service sectors.

"The states recognised very much that certain services like telecom come under the central scheme. Under the current draft, you would need to register in each state which would make it very very cumbersome," Forbes said.

"And states were very receptive to the idea that one needs a simple, single registration. Because that won't affect revenue, it will only make a simpler and more transparent regime."

The rapidly expanding e-commerce companies made a strong pitch for keeping them out of the proposed GST ambit, but the state finance ministers appeared in no mood to oblige.

When Mitra questioned the billion dollar valuations some of the so-called online platforms command, the e-retailers said their source of revenue is advertisement on which they pay service tax.

Vendors selling goods through their portals should be liable to pay GST, they argued.

Nasscom in its representation said the sector is creating huge job opportunities and allowing small industries to sell their products.

Stating that e-commerce facilitates competition, it said one cannot avoid being in the tax bracket.

Mitra, however, said the discussions so far have concluded that the e-commerce sector is generating millions of dollar, but pay practically no taxes.

According to Mitra, consumers buying products online pay VAT, producer pays excise duty but these companies go untaxed on the pretext that the transaction is just a pass-through.

"E-commerce brings in competition, but you are also adding some value. Else how are your companies generating so much valuation?" Mitra wondered.

He felt that the issue may become a political hot potato as the end product will come under GST but the intermediary will not pay tax.

The model draft GST law has brought e-commerce under its purview. Under it, all online purchases will be taxed at the first point of transaction.

Putting e-commerce under GST is expected to solve some of the tax woes of such companies. States like Uttarakhand, Assam and Bihar recently imposed a 10 per cent entry tax on the goods sold online and there were fears that more states may follow suit.

The GST regime is seen as ending such arbitrary moves by state governments.