oppn parties Welcome Solution to GST Tangle

News Snippets

  • Government planning a loan mela to cover 400 districts in two phases
  • PM Modi says Kashmiris need a hug from all Indians
  • NPA tag will not be put on any MSME till March 20
  • Government likely to announce another economic stimulus package today ahead of the GST Council meet in Goa
  • Air Marshall RKS Bhadauria, slated to retire just a few days from now, to be the next chief of IAF
  • PM Modi slams politicians from his own party who are making irresponsible statements on the Ayodhya case and tells them to wait for the Supreme Court order
  • Telecom panel says resident welfare associations (RWA) cannot give monopoly access to any one service provider and infrastructure in public spaces and residential complexes will have to be shared by all
  • Mamata Banerjee meets Amit Shah, tells him there is no need for an NRC in Bengal
  • After 14 days, there is no hope left for reviving Vikram, the moon lander
  • CBI teams search for elusive Rajeev Kumar
  • Union minister Babul Supriyo assaulted at Jadavpur University
  • West Bengal governor's convoy not allowed to enter Jadavpur University following a blockade by Left students' union
  • ABVP supporters create ruckus at Jadavpur University in Kolkata
  • The Army conducts an operational alert exercise in eastern Ladakh
  • The IAF reopened the Vijaynagar advance landing ground, an airstrip in Arunachal Pradesh near the Chinese border
Government announces cuts in corporate income tax, stock markets welcome the decision with a massive jump
oppn parties
Welcome Solution to GST Tangle

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 GST tangle seems to have been solved with the pending contentious issues finding a solution. Although the date has been pushed back to July 1, 2017 it is better in a way because by then, expectedly, the confusion created by demonetization will be over and done with and the economy will be ready to shift to something as dynamic and forward-looking as the GST.

There were two major issues that were holding back the GST. Both the Centre and the states wanted to have jurisdiction over the small enterprises and high seas sales. Under the deal reached, the states will assess 90% of those with turnover under Rs 1.5 cr and the rest will be assessed by the Centre. Both the Centre and the state will share control over those having turnover in excess of Rs 1.5 cr., with the finance minister clarifying that each assessee will be assessed by only one authority. High seas sales will be assessed by the states in a major concession by the Centre.

West Bengal stuck out like a sore thumb, protesting against the deal but its stand was neutralized as all other states agreed to the formula that was worked out. It is sad that despite being in the forefront of the GST implementation (successive finance ministers from West Bengal have chaired the committee tasked with drawing up the modalities of GST), West Bengal objected to the final decision. This was only due to changed political equations and not due to economic considerations.

GST is a major reform that will turn India into a common market by removing a plethora of indirect taxes by both the Centre and the states. It will also remove tariff barriers that prevent free movement of goods. Further, it will act as a disincentive to do illegal business as input tax deduction will not be available if materials are sourced from illegal sources, making the final product costlier and uncompetitive.

GST has the potential of bringing a huge number of units in the informal sector to the formal economy, thereby boosting revenues and clamping on generation of black money. Further, transparency in taxation and administration will do away with frequent disputes with assessees. Of course there will be some teething problems initially, but once everyone gets the clear picture, India will do better business and the governments will collect more tax.