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

News Snippets

  • Last date for filing Income Tax returns by salaried employees extended to August 31
  • Supreme Court extends Assam NRC deadline to August 31
  • Prohibitory orders clamped in Bengaluru. Wine shops, pubs, bars and restaurants ordered closed for the next 48 hours
  • Congress still trying to avoid the floor test in Karnataka
  • 75 percent of the jobs in all private sector firms to be reserved for locals in Andhra Pradesh
  • Supreme Court will hear the petition of two independent MLAs seeking a direction to the Karnataka Speaker to hold the trust vote "forthwith"
  • Congress-JD(S) and a partisan Speaker push the Karnataka trust vote to Tuesday
  • Panel submits draft legislation to the government to criminalize mining, investing and trading of crypto-currencies
  • Government panel suggest a ban on crypto-currencies
  • Lok Sabha passes RTI Act amendment bill amid protests by the Opposition
  • Jasprit Bumrah rested for ODIs and T20s
  • Dinesh Kartik ignored across fromats
  • Rohit Sharma included in Test team too while Wriddhiman Saha makes a comeback after injury
  • Virat Kohli retained as captain across formats for the West Indies tour
  • MS Dhoni decides to take a two-month break, will skip West Indies tour but will not retire
Congress-JD(S) government loses trust vote in Karnataka. BJP might stake claim to form the government
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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.