The tour, beginning September 12, aims at studying the Goods and Services Tax model in the two countries; it will include Chief Ministers, state Finance Ministers, their officials and three members of the central government - the largest single group to go overseas on such a visit. The bill will be paid jointly by the Centre and states; the total cost of the trip is not known yet, but will include business class travel for 57 people, stay at Toronto, Ottawa and Vancouver in Canada, with a two-day sightseeing tour thrown in, and then the Japanese leg of the tour, likely to be a similar experience.
In May this year, the government said that in hard economic times it wanted to cut 10 per cent of its spending and announced austerity measures. That meant a ban on study tours and conferences, unless absolutely necessary. “Where travel is unavoidable, it will be ensured that officers of the appropriate level dealing with the subject are sponsored instead of those at higher levels. The size of the delegation and the duration of the visit will be kept to the absolute minimum,” a Finance Ministry circular had said in May. The government said it would not encourage study tours unless they were fully sponsored.
The GST study tour is unlikely to qualify as "unavoidable travel." India does not have a goods and services tax; a Constitutional Amendment Bill necessary to introduce GST in the country is still to be cleared by Parliament. And that will happen only after a Parliamentary Standing Committee submits its report.
But an Empowered Committee wrote to the Finance Ministry, while recommending the tour, “It will be extremely useful for the introduction of GST in India to study the indirect tax system followed in Japan. Specifically, the empowered committee wishes to study the information technology system in Japan to detect frauds in inter-state transactions.” The group also wants to understand how Japan has cut down its consumption tax, the substitute for the GST rate in Japan, to around 5 per cent. The study, officials reckon, will help the group recommend a system which will minimise the burden on stakeholders in India.
In Canada, the group wishes to study the inter-province movement of goods and services, electronic invoices to track frauds and also issue of federal autonomy.
Expert groups have already studied other GST models. That entailed five such trips overseas since 2006. A group has earlier visited France, Belgium, Spain and Luxembourg over 10 days in September last year. On earlier occasions, groups have visited Canada, UK, Brazil, Australia, Singapore and Italy to carry out similar studies.
Finance Ministry sources have told NDTV that none of those study groups have submitted any recommendations or report on their findings to the Centre. Despite that, approval for this year's tour came in July from the desk of the Prime Minister, who then held temporary charge of the Finance Ministry. This was only weeks after the government officially announced austerity measures on May 31.
The proposal was also reportedly put up before Finance Minister P Chidambaram for his scrutiny when he took charge on August 1; since the Prime Minister had already given his nod, the Finance Minister concurred, sources said.