oppn parties GST Council Meet: Routine Affair

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GST Council Meet: Routine Affair

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.

The first meeting of the GST Council under the new government and a new finance minister was a routine affair, to put it mildly. It was expected that the new government would take some bold decisions that would portray its intent of reviving the economy. But the meeting focused more on procedural matters rather than the urgent need to revise the rates for several products.

The decision to allow Aadhar for GST registration, both for individuals and companies, is good. This was possible because the money paid for such registration is paid into the Consolidated Fund of India (CFI) and the Supreme Court had permitted the use of Aadhar for any purpose if the amount was transferred to the CFI. This would make GST registrations easier. The Council has also simplified the filing of returns and this will make life easier for small traders.

But the Council erred in extending the life of the National Anti-Profiteering Agency (NAPA) by two years. It is true that some unscrupulous companies and traders do not pass on the benefit of the rate reduction in GST to consumers, but such things should be left to market mechanisms rather than a regulator. Technological advances and intense competition in the marketplace ensures that sooner, rather than later, any price reduction as a result of lower taxes has to be passed on to the customer. The powers of the NAPA have also been increased. It can now impose an additional 10% of the profiteered amount as penalty, in addition to the Rs 25000 maximum it could impose earlier. There is a need to watch for highhandedness by officers of NAPA.

The Council should have reduced rates, at least on cement, air-conditioners, bottled water and electric cars, just to name four products. If the government pushes affordable housing and focuses on infrastructure, the high rate of tax on cement is self-defeating. Air-conditioners and bottled drinking water are no longer luxuries. There are also a host of input products that are taxed at a higher rate than the final product they help in producing. These should also get a rate cut. The Council should also focus on evasion now that it has introduced many measures to simplify return filing.