oppn parties Welcome Solution to GST Tangle

News Snippets

  • Former Pakistani cricketer Shoaib Akhtar proposes an Indo-Pak ODI series to raise funds for fighting coronavirus
  • Maharashtra government says many Tablighi Jamaat members who attended the Markaz and returned have gone into hiding
  • West Bengal government identifies hotspots in Kolkata and the rest of the state, inclined to extend the lockdown in those places only
  • Prime Minister Modi holds a video conference with floor leaders of opposition parties, hints at extending the lockdown
  • UP seals hotspots and makes masks mandatory
  • Masks made compulsory in Mumbai, violators will be arrested
  • ICMR says an infected person can infect 406 people in 30 days without social distancing and lockdown
  • Stock markets make a smart recovery. Sensex up by record 2476 points on global cues
  • Schools, colleges and shopping malls likely to remain closed for a further period of one month, says empowered group of ministers
  • PM Modi tells BJP workers that India is in for a long battle against the coronavirus and there is no scope to feel tired or defeated
  • PM Modi asks ministers to focus on exports and new areas and sectors
  • PM Modi asks ministers to prepare business continuity plan post the lifting of the lockdown
  • Corona cases in India cross 4000 and the death toll stands at 124
  • The government decides to double the testing of corona suspects from 10000 now to 20000 in the next three days
  • Flipkart assures employees that there will be no job or salary cuts due to the COVID-19 pandemic
COVID-19: 773 new cases and 32 deaths in the last 24 hours, reports the health ministry
oppn parties
Welcome Solution to GST Tangle

By Sunil Garodia
First publised on 2017-01-17 19:45:26

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.