oppn parties One Year Of GST: Critics Must Eat Their Words

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  • Crude prices fall sharply as Saudi Arabia assures normal production in a few weeks. Prices fall by 5.4% to $65.30 per barrel
  • Sensex tumbles 700 points over fears that rising crude prices will deal a body blow to the tottering Indian economy
  • As Rajeev Kumar fails to appear before the CBI despite several notices, the agency forms a special team to locate and apprehend him
  • S Jaishankar says Pakistan is not a normal neighbour and its behaviour is a "set of aberrations"
  • External Affairs Minister S Jaishankar says PoK in Indian territory and the country hopes to have physical jurisdiction over it one day
  • Barasat Sessions court near Kolkata rejects Rajeev Kumar anticipatory bail application citing lack of jurisdiction as the reason
  • PM Modi celebrates his birthday with Narmada aarti and later has lunch with his mother.
  • All 6 Bahujan Samaj Party MLAs merge with the Congress in Rajasthan
  • Bengal CM Mamata Banerjee to meet PM Modi on Wednesday, state issues on the agenda
  • Pakistan to open Kartarpur corridor on Nov 9
  • Rajeev Kumar, ex-police commissioner of Kolkata and wanted for questioning in the Sarada scam does not appear before the CBI despite the state administration requesting him to do so
  • Supreme Court asks the Centre to restore normalcy in J&K but keeping national interest in mind
  • As Trump accepts the invitation to attend a programme in Houston with PM Modi, India rushes to settle trade issues with US
  • After drone attack on Aramco's Suadi Arabia facility, oil prices jump 19% in intra-day trading causing worries for India
  • Imran Khan raises nuclear war bogey again, says if Pakistan loses a conventional war, it might fight till the end with its nuclear arsenal
Sunni Wakf Board and Nirvani Akhara write to the Supreme Court for a negotiated settlement to the Ayodhya dispute
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One Year Of GST: Critics Must Eat Their Words

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.
It is one year since the landmark reform GST was introduced in India to subsume 17 taxes and 23 cesses. It was called the “good and simple tax” by PM Modi and was expected to bring a plethora of benefits to the economy and the countrymen. Although it was introduced hastily without the groundwork required to launch such a huge reform having been completed, it needs to be stressed that no tax structure can be fine tuned to be absolutely glitch-free before its launch. It is only after some months – or even years – of being in place that tax systems can be made stable. If we keep that in mind, GST is a huge success.

It also needs to be kept in mind that since most state levies were being subsumed in GST, revenue loss after its implementation would have meant that the states would have suffered and would have called for going back to the old system. Hence, the initial rates were kept high to make them revenue-neutral. Now that compliance has improved (and will improve further as simplification of the filing and reporting process goes on) and collections have surpassed expectations, we can expect rates to be lowered. Despite the prime minister saying that “milk and Mercedes cannot be taxed at the same rate,” we can also expect rationalization of the tax slabs. At present, there are six slabs of 0%, 5%, 12%, 18%, 28% and 28% plus cess. In future, we can hope for just four slabs.

Since the states have gained from the implementation of GST, it should now be impressed upon them that it is necessary to bring petroleum, alcohol, real estate and electricity duty under the net. The Centre should also think of doing away with exemptions and bring all goods and services under GST. Keeping products and services away from any tax system or granting exemptions to some, leaves room for tax avoidance. Since invoice matching is going to be introduced from September 2018, ideally all goods and services must be brought under the net.

It is heartening that the e-way bill system has been implemented without glitches. It will go a long way in reducing corruption at state border and ensure faster movement of goods. Now, the GST Council must gear up to rectify the remaining administrative problems. The problems might even multiply once invoice matching starts. So the council must ensure that the backend remains robust and glitches do not wash away the gains of the last 12 months.