January 22, 2025

The recommendation of the GST panel headed by chief economic advisor to the GOI, Arvind Subramanian, that the 1% tax on inter-state sale of goods over and above the GST be dropped is eminently sensible and should be adopted. So is the recommendation that the rate of GST should not be fixed and should not be a part of the Constitutional Amendment Bill (CAB) to be introduced for GST.

The purpose of GST is to replace all Central and state indirect taxes in order to reduce confusion, complication and hindrances to business and make India a seamless business entity. In such a model, the 1% additional tax on inter-state movement of goods stood out like an incongruity. For, any tax over and above the GST defeats the purpose of the bill. There should be no political issues on this.

But the second recommendation goes against what the Congress is demanding. It says that there should be cap of 18% on GST and this should be incorporated in the CAB. While no one will deny that 18% is a huge level of taxation and there should be a cap on the extent to which the government can tax the citizen, it is the Congress mentality of putting barriers against the easy passage of the Bill that is incomprehensible.

The GST Bill was Congress’ baby (with the BJP then objecting to its various measures). The party is now smarting for the fact that if the Bill becomes law, the NDA and the BJP, especially Modi, will get all the credit for having brought about a game changing and far reaching financial reform. But whatever the reason, the party should now cooperate and help in changing the business landscape of the country.

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