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

January 29, 2023

People Are Talking About

Welcoming 2023

News Snippets

  • RBI governor Shaktikanta Das says that inflation is easing and the current account deficit is manageable
  • Adani Enterprises FPO sees just 1% subscription on the first day as the stock goes down to Rs 2762, much below the price band of Rs 3112-3276
  • Stocks bleed on Friday post the Hindenburg report as Adani stocks are hammered: Sensex loses 874 points to 59330 and Nifty 287 points to 17604
  • Rs 263cr TDS scam detected by the I-T department. A mid-level officer was the kingpin and had amassed huge wealth
  • Women's U-19 World Cup -India reaches the final by beating New Zealand by 8 wickets
  • New Zealand beat India by 21 runs in the first T20 as spinners choke Indian batters
  • Sania Mirza and Rohan Bopanna lose in the Australian Open finals
  • Sania Mirza and Rohan Bopanna lose in the final of the Australian Open
  • India to play New Zealand in the first T20 of the three-match series in Ranchi today
  • RBI has proposed special purpose vehicles (SPEs) mechanism to sell bad loans to interested investors via securitization
  • JD(U) decides not to attend the Bharat Jodo Yatra finale in Srinagar
  • Hindenburg defends its report on the Adani group, dares Gautam Adani to sue it in the US
  • BJP's talks with Tipra Motha in Tripura make no headway but the party is confident of winning in the ensuing elections
  • Pathan is a super hit at the box office: Rs 57cr in India (worldwide Rs 106cr) on Day 1 and then Rs 70cr on Day 2 which was Republic Day holiday
  • Centre tells Delhi HC that Covid vaccines can't be mixed when taking the second dose
A Mirage2000 and A Sukhoi 30 of the Indian Air Force on a training mission crashed separately, in Bharatpur in Rajasthan and Morena in Madhya Pradesh, killing one pilot
oppn parties
One Year Of GST: Critics Must Eat Their Words

By Sunil Garodia
First publised on 2018-07-04 08:24:34

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator.
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.