N K Gupta, B Com; LLB; LLM; PhD
Referring the editorial in the Hindustan Times, Congress will continue to oppose GST Bill by saying it an ‘anti-poor’. It is congress driven system which we are following from the decades. Now, we may have a new form of taxation in the name of Goods and Service Tax, which is also an idea originated by the earlier Government. It would not be anti-poor as much as the present system of taxation. Nevertheless the UPA has accepted that India is still a poor country and this new regime will work against the poor. The State VAT design is based largely on the blueprint recommended in the report of the National Institute of Public fiancé and Policy (NIPFP), in 1994. In this report, it was recommended that VAT is only feasible option within the existing framework of the constitution and it would lay the foundation for an even more rational regime in the future i.e. the GST.
The congress is the only party which was in the power around 60 years of the parliamentary affairs and has contributed towards the growth of the nation. Now the NDA Government is in power who wants to bring this new system in the Indian Economy. In the tenure of ‘Congress Raj’ many decades have already been passed but there is no rid from the double taxation. Let us taste the fruit of this new system that may not be constrained just like the present system.
GST is one of the biggest tax reform having far reaching impact. It is as simple as said about. It is comprehensive tax to be levied on the manufacture, sale of goods and provisioning of services. An important aspect of the GST is that there would be a seamless flow of credit covering all the stages of supply chain. The credit of the tax paid on the goods portion can be adjusted for the Service Tax payable on account of services. It would mitigate the cascading effect up to an extent by way of taxing goods and services under the single umbrella.
The GST bill was drafted by keeping the current fiscal need of the Indian economy. It is customized form of Law, based upon the various demands of the States. It is drafted by keeping in mind that their fiscal autonomy would be least effected. To bring the States in line, it becomes compulsory to draft GST bill accordingly.
Though it may seem a mammoth task but it is as simple as shooting a fish in a barrel. Only difficulty is in the prevailing system which restrict GST to integrate with the existing arrangements. India is having federal economic structure where both the Government plays an important role to pass any legislation. To bring any changes in the constitution it need to be passed through both the Government i.e. Centre and States. The same problem is with the GST which we are facing in these days.
States Government is bothering about the fiscal autonomy. Both the Governments do not want to lose their pockets to bring this new formation in the present indirect tax system. On the other side, political parties do not want to miss the credit for the initiation of idea about bringing GST. All the deliberation made under the parliament is only about the interest or revenue loss to the Government and no one is concerned about the general public. GST is the only way forward for the success of the slogans such as ‘Make in India’ and ‘Ease of doing Business’.
The Congress always believed it to be a good initiative, but it has put three conditions that need to be accepted by the Central Government. This GST has to abide by their wish list to bring it in to the light, otherwise it would remain a nightmare. It has created an ambiguity that if demands of the earlier Government get contented then it would not be anti-poor even though in its present form.
This regime is stuck behind the political walls, since it was first announced by the then Finance Minster while introducing the Union budget, 2006-07. Industry is urging from the long time to bring this new regime in the public domain to prepare themselves well in advance but the truth is that it is only in the political domain. Inviting Saudi business to come and invest in India’s defence, energy, railway, health and agriculture sector, Prime Minister said that a common indirect taxation regime in the form of GST was about to happen. He further added, “I cannot give a time frame, but it will happen”.
GST has the potential to boost India’s GDP by 3-4 %. Everyone is expecting of its earlier advent. Even though it is confine in the present form but it can be refined further to maximize the benefit which may not be available in the present form. Rome was not built in a day and similarly it will take time to work effectively. It needs to be implemented first to harvest the crop.
In nutshell, this is the bill which can revive the downtrodden Indian economy by controlling the inflation and bringing down the prices of goods due to seamless flow of credit. It can never be termed as ‘anti-poor’. Conditions imposed by the congress are pure political move to delay the process for passing out of GST bill. We optimism that all political parties, to put aside their rivalries and arrive at a consensus for conveying GST, which is of paramount importance to the Indian economy.
(The Author is executive director, the S. S. Kothari Mehta & Co. and the Co-chairman of the Indirect Taxes Committee, PHD Chamber and the views expressed herein are his personal Views )